10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_____________________

FORM 10-Q

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2021

OR

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from __________ to __________

001-34056

(Commission File Number)

VERSO CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	75-3217389
(State of Incorporation or Organization)	(IRS Employer Identification Number)

8540 Gander Creek Drive

Miamisburg, Ohio 45342

(Address, including zip code, of principal executive offices)

(877) 855-7243

(Registrant’s telephone number, including area code)

_____________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A common stock, par value $0.01 per share	VRS	New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. ☑ Yes ☐ No    

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☑ Yes ☐ No    

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer	☐	Accelerated filer	☑
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act: ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  ☐ Yes ☑ No   

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. ☑ Yes ☐ No

As of July 30, 2021, Verso Corporation had 29,387,674 shares of Class A common stock, par value $0.01 per share, outstanding.

Entity Names and Organization

In this report, the term “Verso,” “the Company,” “we,” “us,” and “our” refer to Verso Corporation, which is the ultimate parent entity and the issuer of Class A common stock listed on the New York Stock Exchange, and its consolidated subsidiaries. Verso is the sole member of Verso Holding LLC, which is the sole member of Verso Paper Holding LLC. As used in this report, the term “Verso Holding” refers to Verso Holding LLC, and the term “Verso Paper” refers to Verso Paper Holding LLC.

Forward-Looking Statements

In this quarterly report, all statements that are not purely historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or “Securities Act,” and Section 21E of the Securities Exchange Act of 1934, as amended, or “Exchange Act.” Forward-looking statements may be identified by the words “believe,” “expect,” “anticipate,” “project,” “plan,” “estimate,” “intend” and other similar expressions. They include, for example, statements relating to our business and operating outlook, including our plans with respect to our Wisconsin Rapids Mill; the continued impact of the COVID-19 pandemic; assessment of market conditions; and the growth potential of the industry in which we operate. Forward-looking statements are based on currently available business, economic, financial and other information and reflect management’s current beliefs, expectations and views with respect to future developments and their potential effects on us. Actual results could vary materially depending on risks and uncertainties that may affect us and our business. The following factors, among others, could cause actual results to differ from those set forth in the forward-looking statements: the adverse impact of idling production, shutting down machines or facilities, restructuring our operations and selling non-core assets; changes in the costs of raw materials and purchased energy; security breaches and other disruption to our information technology infrastructure; uncertainties regarding the impact, duration and severity of the COVID-19 pandemic and measures intended to reduce its spread; the long-term structural decline and general softening of demand facing the paper industry; adverse developments in general business and economic conditions; developments in alternative media, which are expected to adversely affect the demand for some of our key products, and the effectiveness of our responses to these developments; intense competition in the paper manufacturing industry; our limited ability to control the pricing of our products or pass through increases in our costs to our customers; our business being less diversified because of the Pixelle Sale (as defined below), the sale of our Duluth Mill, the closure of our Luke Mill and permanent shut down of the No. 14 paper machine and certain other long-lived assets at our Wisconsin Rapids Mill; the unsolicited proposal from Atlas Holdings LLC regarding a potential transaction to acquire all of the outstanding shares of our common stock; our dependence on a small number of customers for a significant portion of our business; our ability to compete with respect to certain specialty paper products for a period of two years after the closing of the Pixelle Sale (as defined below); any failure to comply with environmental or other laws or regulations; legal proceedings or disputes; any labor disputes; and the potential risks and uncertainties described in Part I, Item 1A, “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2020, and Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” Part II, Item 1A, “Risk Factors,” and other sections of this Quarterly Report on Form 10-Q as such disclosures may be amended, supplemented or superseded from time to time by other reports we file with the Securities and Exchange Commission, including subsequent annual reports on Form 10-K and quarterly reports on Form 10-Q. We assume no obligation to update any forward-looking statement made in this Quarterly Report to reflect subsequent events or circumstances or actual outcomes.

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TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION		Page
Item 1.	Financial Statements
	Unaudited Condensed Consolidated Balance Sheets	4
	Unaudited Condensed Consolidated Statements of Operations	5
	Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss)	5
	Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity	6
	Unaudited Condensed Consolidated Statements of Cash Flows	7
	Notes to Unaudited Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	25
Item 4.	Controls and Procedures	26

PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	27
Item 1A.	Risk Factors	27
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	27
Item 3.	Defaults Upon Senior Securities	28
Item 4.	Mine Safety Disclosures	28
Item 5.	Other Information	28
Item 6.	Exhibits	29
SIGNATURES		31

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PART I.  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

VERSO CORPORATION
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
	December 31,		June 30,
(Dollars in millions, except per share amounts)	2020		2021
ASSETS
Current assets:
Cash and cash equivalents	$	137	$	117
Accounts receivable, net	83		109
Inventories	224		160
Assets held for sale	17		6
Prepaid expenses and other assets	5		10
Total current assets	466		402
Property, plant and equipment, net	613		501
Deferred tax assets	122		134
Intangibles and other assets, net	44		38
Total assets	$	1,245	$	1,075
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	80	$	90
Accrued and other liabilities	92		83
Current maturities of long-term debt and finance leases	1		1
Total current liabilities	173		174
Long-term debt and finance leases	4		3
Pension benefit obligation	350		323
Other long-term liabilities	34		36
Total liabilities	561		536
Commitments and contingencies (Note 11)
Equity:
Preferred stock -- par value $0.01 (50,000,000 shares authorized, no shares issued)	—		—
Common stock -- par value $0.01 (210,000,000 Class A shares authorized with 35,877,533 shares issued and 33,133,649 outstanding on December 31, 2020 and 33,207,306 shares issued and 29,619,127 outstanding on June 30, 2021; 40,000,000 Class B shares authorized with no shares issued and outstanding on December 31, 2020 and June 30, 2021)	—		—
Treasury stock -- at cost (2,743,884 shares on December 31, 2020 and 3,588,179 shares on June 30, 2021)	(39)		(50)
Paid-in-capital	705		651
Retained deficit	(42)		(122)
Accumulated other comprehensive income	60		60
Total equity	684		539
Total liabilities and equity	$	1,245	$	1,075

See notes to Unaudited Condensed Consolidated Financial Statements.

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VERSO CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
	Three Months Ended				Six Months Ended
	June 30,				June 30,
(Dollars in millions, except per share amounts)	2020		2021		2020		2021
Net sales	$	268	$	329	$	739	$	611
Costs and expenses:
Cost of products sold (exclusive of depreciation and amortization)	271		272		698		536
Depreciation and amortization	22		17		45		119
Selling, general and administrative expenses	16		20		43		35
Restructuring charges	—		6		6		17
Other operating (income) expense	1		3		(87)		2
Operating income (loss)	(42)		11		34		(98)
Interest expense	—		—		—		1
Other (income) expense	(5)		(7)		(9)		(13)
Income (loss) before income taxes	(37)		18		43		(86)
Income tax expense (benefit)	(3)		2		23		(12)
Net income (loss)	$	(34)	$	16	$	20	$	(74)
Income (loss) per common share:
Basic	$	(0.99)	$	0.47	$	0.56	$	(2.29)
Diluted	(0.99)		0.47		0.56		(2.29)
Weighted average common shares outstanding (in thousands)
Basic	34,548		32,093		34,827		32,566
Diluted	34,548		32,315		35,023		32,566

See notes to Unaudited Condensed Consolidated Financial Statements.

VERSO CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
	Three Months Ended				Six Months Ended
	June 30,				June 30,
(Dollars in millions)	2020		2021		2020		2021
Net income (loss)	$	(34)	$	16	$	20	$	(74)
Other comprehensive income (loss), net of tax	—		—		—		—
Comprehensive income (loss)	$	(34)	$	16	$	20	$	(74)

See notes to Unaudited Condensed Consolidated Financial Statements.

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VERSO CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
	Class A								Retained Earnings (Deficit)		Accumulated Other Comprehensive Income (Loss)		Total Stockholders’ Equity
(Dollars in millions, shares in thousands)	Common Shares	Common Stock		Treasury Shares	Treasury Stock		Paid-in-Capital
Balance - March 31, 2020	35,766	$	—	717	$	(12)	$	700	$	226	$	122	$	1,036
Net income (loss)	—	—		—	—		—		(34)		—		(34)
Treasury shares	—	—		1,380	(20)		—		—		—		(20)
Dividends and dividend equivalents declared	—	—		—	—		—		(3)		—		(3)
Equity award expense	—	—		—	—		2		—		—		2
Balance - June 30, 2020	35,766	$	—	2,097	$	(32)	$	702	$	189	$	122	$	981
Balance - March 31, 2021	36,239	$	—	3,519	$	(49)	$	706	$	(135)	$	60	$	582
Net income (loss)	—	—		—	—		—		16		—		16
Treasury shares	—	—		69	(1)		—		—		—		(1)
Common stock issued for restricted stock	8	—		—	—		—		—		—		—
Dividends and dividend equivalents declared	—	—		—	—		—		(3)		—		(3)
Repurchase of common stock	(3,040)	—		—	—		(56)		—		—		(56)
Equity award expense	—	—		—	—		1		—		—		1
Balance - June 30, 2021	33,207	$	—	3,588	$	(50)	$	651	$	(122)	$	60	$	539
Balance - December 31, 2019	34,949	$	—	245	$	(5)	$	698	$	172	$	122	$	987
Net income (loss)	—	—		—	—		—		20		—		20
Treasury shares	—	—		1,852	(27)		—		—		—		(27)
Common stock issued for restricted stock	817	—		—	—		—		—		—		—
Dividends and dividend equivalents declared	—	—		—	—		—		(3)		—		(3)
Equity award expense	—	—		—	—		4		—		—		4
Balance - June 30, 2020	35,766	$	—	2,097	$	(32)	$	702	$	189	$	122	$	981
Balance - December 31, 2020	35,878	$	—	2,744	$	(39)	$	705	$	(42)	$	60	$	684
Net income (loss)	—	—		—	—		—		(74)		—		(74)
Treasury shares	—	—		844	(11)		—		—		—		(11)
Common stock issued for restricted stock	369	—		—	—		—		—		—		—
Dividends and dividend equivalents declared	—	—		—	—		—		(6)		—		(6)
Repurchase of common stock	(3,040)	—		—	—		(56)		—		—		(56)
Equity award expense	—	—		—	—		2		—		—		2
Balance - June 30, 2021	33,207	$	—	3,588	$	(50)	$	651	$	(122)	$	60	$	539

See notes to Unaudited Condensed Consolidated Financial Statements.

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VERSO CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
	Six Months Ended
	June 30,
(Dollars in millions)	2020		2021
Cash Flows From Operating Activities:
Net income (loss)	$	20	$	(74)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization	45		119
Noncash restructuring charges	—		8
Net periodic pension cost (income)	(9)		(11)
Pension plan contributions	(18)		(16)
Amortization of debt issuance cost	—		1
Equity award expense	4		2
Gain on Sale of Androscoggin/Stevens Point Mills	(88)		—
Loss on Sale of Duluth Mill	—		3
Deferred taxes	23		(12)
Changes in assets and liabilities:
Accounts receivable, net	18		(25)
Inventories	(61)		60
Prepaid expenses and other assets	(2)		(4)
Accounts payable	(18)		9
Accrued and other liabilities	(19)		(6)
Net cash provided by (used in) operating activities	(105)		54
Cash Flows From Investing Activities:
Proceeds from sale of assets	—		1
Capital expenditures	(37)		(18)
Net proceeds from Sale of Androscoggin/Stevens Point Mills	340		—
Net proceeds from Sale of Duluth Mill	—		6
Recognition of deposits and proceeds from sale of Luke Mill equipment	—		10
Net cash provided by (used in) investing activities	303		(1)
Cash Flows From Financing Activities:
Borrowings on ABL Facility	36		—
Payments on ABL Facility	(36)		—
Principal payment on financing lease obligation	(1)		—
Repurchase of common stock	—		(56)
Acquisition of treasury stock	(27)		(11)
Dividends paid to stockholders	(3)		(6)
Net cash provided by (used in) financing activities	(31)		(73)
Change in Cash and cash equivalents and restricted cash	167		(20)
Cash and cash equivalents and restricted cash at beginning of period	44		139
Cash and cash equivalents and restricted cash at end of period	$	211	$	119
Supplemental cash flow disclosures:
Total interest paid	$	—	$	1
Total income taxes paid	—		—
Noncash investing and financing activities:
Right-of-use assets obtained in exchange for new finance lease liabilities	$	—	$	—
Right-of-use assets obtained in exchange for new capitalized operating lease liabilities	7		1
Net right-of-use assets re-measurement	—		2

See notes to Unaudited Condensed Consolidated Financial Statements.

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VERSO CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.  SUMMARY OF BUSINESS AND BASIS OF PRESENTATION

Nature of Business — Verso is a producer of graphic paper, specialty paper, packaging paper and Northern Bleached Hardwood Kraft, or “NBHK,” pulp. Verso’s products are used primarily in media, marketing applications and commercial printing applications. Uses include catalogs, magazines, high-end advertising brochures, direct-mail advertising, and specialty applications, such as labeling and other special applications. Verso’s NBHK pulp is used to manufacture printing, writing and specialty paper grades, tissue and other products. Verso operates in the pulp and paper market segments. However, Verso determined that the operating income (loss) of the pulp segment is immaterial for disclosure purposes. Verso’s assets are utilized across segments in an integrated mill system and are not identified by segment or reviewed by management on a segment basis. Verso operates primarily in North America.

Sale of Androscoggin Mill and Stevens Point Mill — On November 11, 2019, Verso and Verso Paper entered into a membership interest purchase agreement, or the “Purchase Agreement,” with Pixelle Specialty Solution LLC, or “Pixelle,” whereby Verso and Verso Paper agreed to sell to Pixelle, or the “Pixelle Sale,” or “Sale of Androscoggin/Stevens Point Mills,” all of the outstanding membership interests in Verso Androscoggin, LLC an indirect wholly owned subsidiary of Verso and the entity that, as of the closing date of the Pixelle Sale, held all the assets primarily related to Verso’s Androscoggin Mill located in Jay, Maine, and Stevens Point Mill, located in Stevens Point, Wisconsin. The transaction was approved by Verso’s stockholders on January 31, 2020 and closed on February 10, 2020 (see Note 5).

Duluth Mill and Wisconsin Rapids Mill — On June 9, 2020, Verso announced plans to indefinitely idle its mills in Duluth, Minnesota and Wisconsin Rapids, Wisconsin, while exploring viable and sustainable alternatives for both mills including restarting, selling or permanently closing one or both mills. Verso’s decision to reduce its production capacity was driven by the accelerated decline in graphic paper demand, primarily resulting from the COVID-19 pandemic. The production capacity of the Duluth Mill was approximately 270,000 tons of supercalendered/packaging paper and the production capacity of the Wisconsin Rapids Mill is approximately 540,000 tons of coated and packaging paper. Verso idled production at the Duluth Mill on July 1, 2020 and at the Wisconsin Rapids Mill on July 27, 2020. On December 31, 2020, Verso decided to permanently shut down the Duluth Mill, which was subsequently sold on May 13, 2021 (see Note 5). On February 8, 2021, Verso decided to permanently shut down the No. 14 paper machine and certain other long-lived assets at the Wisconsin Rapids Mill (see Note 10). Verso continues to operate the facility at the Wisconsin Rapids Mill to convert paper produced at the Quinnesec and Escanaba mills to sheets for the commercial print market.

COVID-19 Pandemic — The COVID-19 Pandemic has impacted Verso’s operations and financial results since the first quarter of 2020 and continues to have an impact on the Company. If a resurgence of COVID-19 related variants occurs or if the vaccines introduced to combat the virus are not effective, the adverse impact on Verso’s business, financial position, results of operations and cash flow could be material. Verso serves as an essential manufacturing business and, as a result, Verso’s mills have continued to be operational during the time of the pandemic in order to meet the ongoing needs of its customers, including those in other essential business sectors, which provide food, medical and hygiene products needed in a global health crisis. The guidelines and orders enacted by federal, state and local governments have, however, impacted demand from retailers, political campaigns, and sports and entertainment events, driving reduced purchases of printed materials and substantially impacting Verso’s graphic paper business.

While Verso cannot reasonably estimate the full impact of COVID-19 on the business, financial position, results of operations and cash flows, Verso has seen its sales, volume and prices begin to recover during the second quarter of 2021.

Basis of Presentation — This report contains the Unaudited Condensed Consolidated Financial Statements of Verso as of December 31, 2020 and June 30, 2021 and for the three and six months ended June 30, 2020 and 2021. The December 31, 2020 Unaudited Condensed Consolidated Balance Sheet data was derived from audited financial statements, but it does not include all disclosures required annually by accounting principles generally accepted in the United States of America, or “GAAP.” In Verso’s opinion, the Unaudited Condensed Consolidated Financial Statements include all adjustments that are necessary for the fair presentation of Verso’s respective financial condition, results of operations and cash flows for the interim periods presented. Except as disclosed in the notes to the Unaudited Condensed Consolidated Financial Statements, such adjustments are of a normal, recurring nature. Intercompany balances and transactions are eliminated in consolidation. The results of

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operations and cash flows for the interim periods presented may not necessarily be indicative of full-year results. These financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto of Verso contained in its Annual Report on Form 10-K for the year ended December 31, 2020.

2.  RECENT ACCOUNTING PRONOUNCEMENTS

Accounting Guidance Adopted in 2021

Accounting Standards Codification Topic 740, Income Taxes. In December 2019, the Financial Accounting Standards Board issued Accounting Standards Update 2019-12, Simplifying the Accounting for Income Taxes, which removes certain exceptions for investments, intraperiod allocations and interim calculations, and adds guidance to reduce the complexity in accounting for income taxes. Verso adopted this guidance on January 1, 2021, and the effect on the Unaudited Condensed Consolidated Financial Statements was not material.

3. REVENUE RECOGNITION

The following table presents revenue disaggregated by product included on the Unaudited Condensed Consolidated Statements of Operations:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
(Dollars in millions)	2020		2021		2020		2021
Paper	$	219	$	289	$	640	$	539
Packaging	18		6		42		13
Pulp	31		34		57		59
Total Net sales	$	268	$	329	$	739	$	611

The following table presents revenue disaggregated by sales channel included on the Unaudited Condensed Consolidated Statements of Operations:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
(Dollars in millions)	2020		2021		2020		2021
End-users and Converters	$	110	$	99	$	280	$	186
Brokers and Merchants	108		178		327		328
Printers	50		52		132		97
Total Net sales	$	268	$	329	$	739	$	611

4. SUPPLEMENTAL FINANCIAL STATEMENT INFORMATION

Restricted Cash — As of December 31, 2020 and June 30, 2021, $2 million of restricted cash was included in Intangibles and other assets, net on the Unaudited Condensed Consolidated Balance Sheets primarily related to asset retirement obligations in the state of Michigan. These cash deposits are required by the state and may only be used for the future closure of a landfill. As of both June 30, 2020 and 2021, Cash and cash equivalents and restricted cash on the Unaudited Condensed Consolidated Statements of Cash Flows includes restricted cash of $2 million.

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Inventories — The following table summarizes inventories by major category:

	December 31,		June 30,
(Dollars in millions)	2020		2021
Raw materials	$	45	$	30
Work-in-process	31		21
Finished goods	125		91
Replacement parts and other supplies	23		18
Inventories	$	224	$	160

Property, plant and equipment — Depreciation expense for the three and six months ended June 30, 2020 was $20 million and $42 million, respectively. Depreciation expense for three and six months ended June 30, 2021 was $16 million and $117 million, respectively. Depreciation expense for the six months ended June 30, 2021 includes $84 million in accelerated depreciation associated with the permanent shutdown of the No. 14 paper machine and certain other long-lived assets at the Wisconsin Rapids Mill (see Note 10). Property, plant and equipment as of June 30, 2020 and 2021 include $4 million and $3 million, respectively, of capital expenditures that were unpaid and included in Accounts payable and Accrued and other liabilities on the Unaudited Condensed Consolidated Balance Sheets.

Income Taxes — Income tax benefit for the three months ended June 30, 2020 was $3 million and income tax expense for the six months ended June 30, 2020 was $23 million. Income tax expense for the three months ended June 30, 2021 was $2 million and income tax benefit for the six months ended June 30, 2021 was $12 million. During the three and six months ended June 30, 2020, Verso recognized $1 million and $7 million, respectively, of additional valuation allowance against state tax credits. During the three months ended June 30, 2021, Verso reduced the valuation allowance against state tax credits by $1 million. During the six months ended June 30, 2021, the net additional valuation allowance against state tax credits was $3 million.

Related Party Transactions — Net sales for the three and six months ended June 30, 2021, include sales to a related party of $18 million and $33 million, respectively. Accounts receivable as of December 31, 2020 and June 30, 2021, include $4 million and $3 million, respectively, associated with this related party.

5. DISPOSITIONS

Sale of Androscoggin Mill and Stevens Point Mill

On February 10, 2020, Verso completed the Pixelle Sale, selling all of the outstanding membership interests in Verso Androscoggin, LLC, an indirect wholly owned subsidiary of Verso and the entity that, as of the closing date of the Pixelle Sale, held all the assets primarily related to Verso’s Androscoggin Mill located in Jay, Maine and Verso’s Stevens Point Mill, located in Stevens Point, Wisconsin. The Pixelle Sale did not qualify as a discontinued operation. As consideration for the Pixelle Sale, Verso received $352 million in cash, which reflected certain adjustments related to Verso’s estimates of cash, indebtedness and working capital of Verso Androscoggin, LLC and Pixelle assumed $37 million of Verso’s unfunded pension liabilities, which reflected certain adjustments in connection with the completed transfer of the unfunded pension liabilities during the year ended December 31, 2020.

During the six months ended June 30, 2020, Verso received $340 million in net cash proceeds from the Pixelle Sale, consisting of $346 million in cash reduced by $6 million in selling costs and recognized an $88 million gain on the sale. In connection with the Pixelle Sale, Verso provided certain transition services to Pixelle and recognized $2 million and $3 million for these services during the three and six months ended June 30, 2020, respectively, on the Unaudited Condensed Consolidated Statements of Operations. During the three months ended June 30, 2020, $1 million of these transition services was recognized as a reduction of Cost of products sold and $1 million was recognized as a reduction of Selling, general and administrative expenses. During the six months ended June 30, 2020, $1 million of these transition services was recognized as a reduction Cost of products sold and $2 million was recognized as a reduction of Selling, general and administrative expenses.

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Luke Mill Equipment and Other Asset Sales

On August 1, 2020, Verso entered into an equipment purchase agreement with Halkali Kagit Karton Sanayi ve Tic. A.S., or the “Purchaser,” a company organized under the laws of Turkey, whereby Verso agreed to sell, and the Purchaser agreed to purchase, certain equipment at Verso’s Luke Mill, primarily including two paper machines. The purchase price was $11 million in cash due at various milestones. As of June 30, 2021, Verso has received $10 million in non-refundable deposits associated with this sale which includes $1 million in the first quarter of 2021 and $1 million in the second quarter of 2021. Verso received the final payment of $1 million in the third quarter of 2021. Management determined that the control over the use of the acquired assets has transferred to the Purchaser and correspondingly recognized the sale of the two paper machines and related assets in June 2021. Verso is exploring options for disposal of the remaining assets of the Luke Mill. As of December 31, 2020 and June 30, 2021, Verso classified $17 million and $6 million, respectively, in Assets held for sale on the Unaudited Condensed Consolidated Balance Sheets.

Sale of Duluth Mill

On May 13, 2021, Verso Minnesota Wisconsin LLC, an indirect wholly owned subsidiary of Verso, entered into an asset purchase agreement with ST Paper 1, LLC and sold all of the assets primarily related to Verso’s Duluth Mill located in Duluth, Minnesota for $7 million in cash, less costs to sell of $1 million. The sale, including related selling costs, resulted in a loss of $3 million, which is included in Other operating (income) expense on the Unaudited Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2021.

6.  DEBT

As of December 31, 2020 and June 30, 2021, Verso Paper had no outstanding borrowings on its ABL Facility (as defined below).

ABL Facility

Verso Paper is the borrower under a $200 million asset-based revolving credit facility, or the “ABL Facility.” From February 6, 2019 until May 10, 2021, the ABL Facility provided for revolving commitments of $350 million, with a $100 million sublimit for letters of credit and a $35 million sublimit for swingline loans. Verso Paper could request one or more incremental revolving commitments in an aggregate principal amount up to the greater of (i) $75 million or (ii) the excess of the borrowing base over the revolving facility commitments of $350 million; however, the lenders were not obligated to increase the revolving commitments upon any such request. On May 10, 2021, Verso Paper entered into a third amendment to the ABL Facility, or the “Third ABL Amendment.” As a result of the Third ABL Amendment, the ABL Facility provides for revolving commitments of $200 million, with a $75 million sublimit for letters of credit and a $20 million sublimit for swingline loans. The amount of borrowings and letters of credit available to Verso Paper pursuant to the ABL Facility is limited to the lesser of $200 million or an amount determined pursuant to a borrowing base ($150 million as of June 30, 2021). As of June 30, 2021, there were no borrowings outstanding under the ABL Facility, with $21 million issued in letters of credit and $129 million available for future borrowings. Availability under the ABL Facility is subject to customary borrowing conditions. The ABL Facility will mature on February 6, 2024.

Outstanding borrowings under the ABL Facility bear interest at an annual rate equal to, at the option of Verso Paper, either (i) a customary London interbank offered rate plus an applicable margin ranging from 1.25% to 1.75% or (ii) the Federal Funds Rate plus an applicable margin ranging from 0.25% to 0.75%, determined based upon the average excess availability under the ABL Facility. Verso Paper is also required to pay a commitment fee for the unused portion of the ABL Facility of 0.25% per year, based upon the average revolver usage under the ABL Facility. In addition, pursuant to the Third ABL Amendment, certain modifications were made to the existing ABL Facility in order to, among other things, provide for determination of a benchmark replacement interest rate when LIBOR is no longer available, subject to the terms, and upon the satisfaction of conditions, specified therein.

All obligations under the ABL Facility are unconditionally guaranteed by Verso Holding and certain of the subsidiaries of Verso Paper. The ABL Facility is secured by a first-priority lien on certain assets of Verso Paper, Verso Holding and the other guarantor subsidiaries, including accounts receivable, inventory, certain deposit accounts, securities accounts and commodities accounts.

The ABL Facility contains financial covenants requiring Verso, among other things, to maintain a minimum fixed charge coverage ratio if availability were to drop below prescribed thresholds. The ABL Facility also requires that certain payment

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conditions, as defined therein, are met in order for Verso to incur debt or liens, pay cash dividends, repurchase equity interest, prepay indebtedness, sell or dispose of assets and make investments in or merge with another company.

7. EARNINGS PER SHARE

The following table provides a reconciliation of basic and diluted income (loss) per common share:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2020		2021		2020		2021
Net income (loss) available to common stockholders (in millions)	$	(34)	$	16	$	20	$	(74)
Weighted average common shares outstanding - basic (in thousands)	34,548		32,093		34,827		32,566
Dilutive shares from stock awards (in thousands)	—		222		196		—
Weighted average common shares outstanding - diluted (in thousands)	34,548		32,315		35,023		32,566
Basic income (loss) per share	$	(0.99)	$	0.47	$	0.56	$	(2.29)
Diluted income (loss) per share	$	(0.99)	$	0.47	$	0.56	$	(2.29)

As a result of the net loss from continuing operations for the three months ended June 30, 2020 and the six months ended June 30, 2021, 0.8 million restricted stock units were excluded from the calculations of diluted earnings per share as their inclusion would be anti-dilutive. As of June 30, 2020 and 2021, Verso had 1.8 million warrants outstanding at an adjusted exercise price per share of $27.86 and $20.89, respectively (see Note 9). As a result of the exercise price of the warrants exceeding the average market price of Verso’s common stock during the three and six months ended June 30, 2020 and 2021, 1.8 million and 2.4 million shares, respectively, were excluded from the calculations of diluted earnings per share as their inclusion would be anti-dilutive.

8.  RETIREMENT BENEFITS

The following table summarizes the components of net periodic pension cost (income) for the periods presented:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
(Dollars in millions)	2020		2021		2020		2021
Service cost	$	—	$	1	$	1	$	1
Interest cost	11		9		23		19
Expected return on plan assets	(16)		(15)		(33)		(31)
Net periodic pension cost (income)	$	(5)	$	(5)	$	(9)	$	(11)

Verso makes contributions to its pension plan that are sufficient to fund actuarially determined costs, generally equal to the minimum amounts required by the Employee Retirement Income Security Act. Contributions to the pension plan during the three and six months ended June 30, 2020 were $10 million and $18 million, respectively. Contributions to the pension plan during the three and six months ended June 30, 2021 were $9 million and $16 million, respectively. On March 11, 2021, the government signed into law the American Rescue Plan Act of 2021, or “ARPA.” The ARPA provides for pension funding relief that will reduce Verso’s expected 2021 required cash contributions to its pension plan to $25 million from $46 million. Verso expects to make at least $9 million in required contributions to the pension plan in the remainder of 2021.

9. EQUITY

Equity Awards

During the six months ended June 30, 2021, Verso granted 0.3 million time-based restricted stock units and 0.2 million performance-based restricted stock units to its executives and certain senior managers. The performance-based restricted stock unit awards granted vest on the performance determination date following the end of the performance period, as measured using an adjusted EBITDAP (earnings before interest, taxes, depreciation, amortization and pension expense/income) metric and a return on invested capital metric over a 3-year period ending December 31, 2023. The vesting criteria of the performance-based

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restricted stock unit awards meet the definition of a performance condition for accounting purposes. The number of shares which will ultimately vest at the vesting date ranges from 0% to 200% of the number of performance-based restricted stock units granted based on performance during the 3-year cumulative performance period. The compensation expense associated with these performance awards is currently estimated at 100%.

On March 5, 2021, Verso modified certain outstanding restricted stock unit awards as part of a retention arrangement for its former Chief Financial Officer who retired on June 30, 2021. As modified, his performance-based restricted stock units will remain outstanding and may vest on a pro-rata basis based on Verso’s achievement of established targets. In addition, the next tranche of his time-based restricted stock units vested at June 30, 2021. The foregoing changes were considered a modification and resulted in a revaluation of his 2019 and 2020 performance-based restricted stock units to a fair value of $0.67 and $8.66, respectively, and a revaluation of each of his 2018, 2019 and 2020 time-based restricted stock units that vested as a result of the modification to a fair value of $13.32.

Verso recognized equity award expense of $2 million and $4 million for the three and six months ended June 30, 2020, respectively, and $1 million and $2 million for the three and six months ended June 30, 2021, respectively. As of June 30, 2021, there was approximately $7 million of unrecognized compensation cost related to the 0.8 million non-vested restricted stock units, which is expected to be recognized over the weighted average period of 2.2 years.

Time-based Restricted Stock Units

Changes to non-vested time-based restricted stock units for the six months ended June 30, 2021 were as follows:

	Restricted Stock	Weighted Average
	Units	Grant Date
Shares (in thousands)	Outstanding	Fair Value
Non-vested at December 31, 2020	421	$	9.95
Granted (1)	264	13.86
Vested	(253)	9.39
Forfeited	(60)	11.79
Non-vested at June 30, 2021(2)	372	13.28

(1) Includes 6 thousand dividend equivalent units on certain time-based restricted stock unit awards for dividends related to the stock units granted but not yet vested at the time cash dividends were paid.

(2) Includes the modified value of the time-based restricted stock units associated with the retention agreement for the former Chief Financial Officer.

Performance-based Restricted Stock Units

Changes to non-vested performance-based restricted stock units for the six months ended June 30, 2021 were as follows:

	Restricted Stock	Weighted Average
	Units	Grant Date
Shares (in thousands)	Outstanding	Fair Value
Non-vested at December 31, 2020	424	$	12.21
Granted (1)	212	13.01
Incremental shares vested (2)	10	—
Vested	(143)	12.87
Forfeited	(65)	10.59
Non-vested at June 30, 2021 (3)	438	11.33

(1) Includes 6 thousand dividend equivalent units on certain performance-based restricted stock unit awards for dividends related to the stock units granted but not yet vested at the time cash dividends were paid.

(2) Incremental shares are a result of performance at 113% of the target level of shares subject to the performance based restricted stock units.

(3) Includes the modified value of the performance-based restricted stock units associated with the retention agreement for the former Chief Financial Officer.

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Share Repurchase Authorization and Dividends

On February 26, 2020, Verso’s Board of Directors authorized up to $250 million of net proceeds from the Pixelle Sale to be used to repurchase outstanding shares of Verso common stock. In conjunction with the declaration of the special cash dividend of $3.00 per share, or $101 million, on August 5, 2020, Verso’s Board of Directors reduced Verso’s total share repurchase

authorization from $250 million to $150 million. During the six months ended June 30, 2020, Verso purchased under its share repurchase authorization approximately 1.6 million of its common stock through open market purchases and 10b-5 programs at a weighted average cost of $14.14 per share. During the six months ended June 30, 2021, Verso purchased under its share repurchase authorization (i) approximately 0.7 million shares of its common stock through open market purchases and 10b-5 programs at a weighted average cost of $13.24 per share and (ii) approximately 3.0 million shares at a purchase price of $18.10 per share through the modified Dutch auction tender offer discussed above. As of June 30, 2021, $56 million of the $150 million authorized remained.

On May 13, 2021, Verso commenced a modified Dutch auction tender offer to purchase for cash shares of its common stock for an aggregate purchase price of not more than $55 million and at a price per share of common stock of not less than $16.00 and not more than $18.30 per share. The tender offer expired on June 10, 2021. Through the tender offer, Verso accepted for purchase approximately 3.0 million shares of its common stock at a purchase price of $18.10 per share for an aggregate purchase price of approximately $56 million, including fees and expenses. The shares of common stock purchased through the tender offer were immediately retired. The excess purchase price over par value was recorded as a reduction to Paid-in capital on the Unaudited Condensed Consolidated Balance Sheet as of June 30, 2021.

On February 5, 2021, Verso’s Board of Directors declared a quarterly cash dividend of $0.10 per share of Verso's common stock, which was paid on March 29, 2021, to stockholders of record on March 18, 2021. On May 7, 2021, Verso’s Board of Directors declared a quarterly cash dividend of $0.10 per share of Verso’s common stock, which was paid on June 29, 2021, to stockholders of record on June 17, 2021. On August 6, 2021, Verso’s Board of Directors declared a quarterly cash dividend of $0.10 per share of Verso’s common stock, payable on September 28, 2021, to stockholders of record on September 17, 2021. Verso commenced paying quarterly dividends in the second quarter of 2020.

Warrants

On July 15, 2016, warrants to purchase up to an aggregate of 1.8 million shares of Class A common stock were issued to holders of first-lien secured debt at an initial exercise price of $27.86 per share and a seven-year term, subject to customary anti-dilution adjustments. As a result of Verso’s various share repurchases, including the modified Dutch auction tender offer, and dividend payments since the issuance of the warrants, as of June 30, 2021, the number of shares of Verso common stock issuable upon exercise of each warrant increased to 1.33 shares of common stock, for an aggregate of approximately 2.4 million shares of common stock, and the warrant exercise price was reduced to $20.89 per share. If all warrants were exercised, Verso would issue 2.4 million shares of Class A common stock and receive $50 million in proceeds. The warrants expire on July 15, 2023. As of June 30, 2021, no warrants have been exercised.

10.  RESTRUCTURING CHARGES

Wisconsin Rapids Mill - On February 8, 2021, Verso decided to permanently shut down the No. 14 paper machine and certain other long-lived assets at its paper mill in Wisconsin Rapids, Wisconsin, while continuing to explore viable and sustainable alternatives with the remaining assets, including its converting operation, No. 16 paper machine and other remaining long-lived assets. This decision was made in response to the continued accelerated decline in printing and writing paper demand. The decision to permanently shut down the No. 14 paper machine and certain other long-lived assets, which have been idle since July 2020, permanently reduced Verso’s total annual production capacity by approximately 185,000 tons of coated paper.

In connection with the permanent shutdown of the No. 14 paper machine at the Wisconsin Rapids Mill, Verso recognized $84 million of accelerated depreciation which is included in Depreciation and amortization on the Unaudited Condensed Consolidated Statement of Operations for the six months ended June 30, 2021.

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The following table details the charges incurred related to the shutdown of No. 14 paper machine and certain other long-lived assets as included in Restructuring charges on the Unaudited Condensed Consolidated Statements of Operations:

	Three Months Ended		Six Months Ended		Cumulative
(Dollars in millions)	June 30, 2021		June 30, 2021		Incurred
Property, plant and equipment, net	$	—	$	5	$	5
Write-off of spare parts and inventory	—		3		3
Total restructuring costs	$	—	$	8	$	8

Duluth Mill — On December 31, 2020, Verso decided to permanently shut down the paper mill in Duluth, Minnesota while continuing with efforts to sell the mill. Management’s decision to permanently shut down the Duluth Mill was made in response to the continued accelerated decline in printing and writing paper demand resulting from the COVID-19 pandemic. The closure of the Duluth Mill, which had been idle since July 2020, reduced Verso’s total annual production capacity by approximately 270,000 tons of supercalendered/packaging paper. In May 2021, Verso completed the sale of the Duluth Mill (see Note 5).

The following table details the charges incurred related to the Duluth Mill closure as included in Restructuring charges on the Unaudited Condensed Consolidated Statements of Operations:

	Three Months Ended		Six Months Ended		Cumulative
(Dollars in millions)	June 30, 2021		June 30, 2021		Incurred
Property, plant and equipment, net	$	—	$	—	$	3
Severance and benefit costs	—		—		1
Write-off of spare parts and inventory	—		—		2
Write-off of purchase obligations and commitments	5		7		8
Other costs	1		2		2
Total restructuring costs	$	6	$	9	$	16

The following table details the changes in the restructuring reserve liabilities related to the permanent shutdown of the Duluth Mill which are included in Accrued and other liabilities on the Unaudited Condensed Consolidated Balance Sheet:

	Six Months Ended
(Dollars in millions)	June 30, 2021
Beginning balance of reserve	$	2
Severance and benefit payments	(1)
Purchase obligations	7
Other costs	2
Payments on other costs	(2)
Ending balance of reserve	$	8

Closure of Luke Mill — On April 30, 2019, Verso announced that it would permanently shut down its paper mill in Luke, Maryland in response to the continuing decline in customer demand for the grades of coated freesheet paper produced at the Luke Mill, along with rising input costs, a significant influx of imports and rising compliance costs and infrastructure challenges associated with environmental regulation. Verso completed the shutdown and closure of the Luke Mill in June 2019, which reduced Verso’s coated freesheet production capacity by approximately 450,000 tons and eliminated approximately 675 positions.

The following table details the charges incurred related to the Luke Mill closure as included in Restructuring charges on the Unaudited Condensed Consolidated Statements of Operations:

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	Six Months Ended
	June 30,				Cumulative
(Dollars in millions)	2020		2021		Incurred
Property, plant and equipment, net	$	—	$	—	$	10
Severance and benefit costs	(1)		—		18
Write-off of spare parts and inventory	—		—		9
Write-off of purchase obligations and commitments	—		—		1
Other costs(1)	7		—		19
Total restructuring costs	$	6	$	—	$	57

(1) Other costs primarily relate to activities associated with the shutdown of property, plant and equipment, such as draining, cleaning, dismantling, securing and disposing of such assets. Other costs for the six months ended June 30, 2020 includes $6 million for the final cleaning and shutdown of various storage tanks.

11. COMMITMENTS AND CONTINGENCIES

General Litigation — Verso is involved from time to time in legal proceedings incidental to the conduct of its business. While any proceeding or litigation has the element of uncertainty, Verso believes that the outcome of any of these lawsuits or claims that are pending or threatened or all of them combined (other than those that cannot be assessed due to their preliminary nature) will not have a material effect on the Unaudited Condensed Consolidated Financial Statements.

In November 2019, the state of West Virginia asserted in an administrative enforcement action that three above-ground storage tanks at Verso’s Luke Mill leaked and that Verso had failed to take certain actions to prevent and report the release of pollutants into the North Branch of the Potomac River. In March 2020, the Potomac Riverkeeper Network (“PRKN”) filed a federal lawsuit against Verso alleging the improper handling, storage and disposal of wastes generated at the Luke Mill. In May 2020, Maryland joined the PRKN lawsuit and in July 2020, Maryland obtained dismissal of a lawsuit that it previously had filed with respect to the same facts. The Luke Mill sits on the border of West Virginia and Maryland, and it was closed in June 2019.

On April 1, 2021, a consent decree was approved and entered by the court in the federal lawsuit, setting forth the terms agreed by Verso with the PRKN and the Maryland Department of the Environment (“the Department”), to settle the claims by PRKN and the state of Maryland. Pursuant to the consent decree, Verso has agreed to pay an aggregate of $1 million in penalties and fees to the Department and PRKN. Verso has also agreed to reimburse the Department for any future response and oversight costs at the Luke Mill up to a maximum of $25,000 for the first year after the effective date of the consent decree and $20,000 per year thereafter until termination of monitoring oversight under the consent decree. In addition to the penalties and fees paid pursuant to the consent decree, Verso also agreed to continue its ongoing remedial activities at the Luke Mill and to monitor the site for at least three years after completion of its remedial efforts.

Verso is currently engaged in settlement negotiations with the state of West Virginia. Verso believes it is nearing an agreement with the state of West Virginia to settle claims related to the environmental impacts at the Luke Mill.

As a result of the consent decree approval on April 1, 2021, Verso revised its estimates of costs related to the ongoing environmental remediation and monitoring efforts and recorded $4 million in Cost of products sold on the Unaudited Condensed Consolidated Statement of Operations during the six months ended June 30, 2021. As of June 30, 2021, $8 million of environmental remediation costs are included on the Unaudited Condensed Consolidated Balance Sheet, including $3 million in Accrued and other liabilities and $5 million in Other long-term liabilities. As of December 31, 2020, $5 million of environmental remediation costs, which included the cost related to the consent decree mentioned above, are included in Accrued and other liabilities on the Unaudited Condensed Consolidated Balance Sheet.

In connection with the closure of former idled mills, claims were asserted against Verso relating to certain contractual obligations. Verso recognized $4 million and $6 million for the three and six months ended June 30, 2021, respectively, included in Restructuring charges on the Consolidated Statements of Operations, associated with contractual obligations. Verso does not believe the claims are reasonable and will continue to defend its position and does not believe any additional charges will be material.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

We are a leading North American producer of coated paper, shipped in both roll and sheet formats, which is used primarily in printing applications to produce high-end advertising brochures, catalogs and magazines among other media and marketing publications as well as specialty and packaging applications. We also produce and sell NBHK pulp, which is used to manufacture printing and writing paper grades and tissue products.

We currently operate three paper machines at our mill in Escanaba, Michigan and one paper machine and one NBHK pulp machine at our mill in Quinnesec, Michigan. The mills have an aggregate annual production capacity of approximately 1,400,000 tons of paper and NBHK pulp. We also operate a sheeting facility at our Wisconsin Rapids Mill to convert paper produced at our Michigan mills to sheets for the commercial print market.

2021 Developments

Receipt of Unsolicited Acquisition Proposal from Atlas Holdings LLC

On July 14, 2021, we issued a press release confirming receipt of an unsolicited, non-binding proposal from Atlas Holdings LLC regarding a potential transaction to acquire all outstanding shares of our common stock for $20.00 per share in cash. There can be no assurance that any negotiations between us and Atlas Holdings LLC regarding this proposal will take place, and if such negotiations do take place, there can be no assurance that any transaction with Atlas Holdings LLC will occur or be consummated.

Modified Dutch Auction Tender Offer

On May 13, 2021, we commenced a modified Dutch auction tender offer to purchase for cash shares of our common stock for an aggregate purchase price of not more than $55 million and at a price per share of common stock of not less than $16.00 and not more than $18.30 per share. The tender offer expired on June 10, 2021. Through the tender offer, we accepted for purchase approximately 3.0 million shares of our common stock at a purchase price of $18.10 per share for an aggregate purchase price of approximately $56 million, including fees and expenses. The shares of common stock purchased through the tender offer were immediately retired.

Sale of Duluth Mill

On May 13, 2021, Verso Minnesota Wisconsin LLC, an indirect wholly owned subsidiary of Verso, entered into an asset purchase agreement with ST Paper 1, LLC and sold all of the assets primarily related to our Duluth Mill located in Duluth, Minnesota for $7 million in cash less costs to sell of $1 million. The sale, including related sale costs, resulted in a loss of $3 million included in Other operating (income) expense on the Unaudited Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2021.

Wisconsin Rapids Mill

On February 8, 2021, we decided to permanently shut down the No. 14 paper machine and certain other long-lived assets at our paper mill in Wisconsin Rapids, Wisconsin, while continuing to explore viable and sustainable alternatives with the remaining assets, including our converting operations, No. 16 paper machine and other remaining long-lived assets. This decision permanently reduced our total annual production capacity by 185,000 tons of coated paper. In the first quarter of 2021, we recognized $84 million of accelerated depreciation which is included in Depreciation and amortization on the Unaudited Condensed Consolidated Statement of Operations for the six months ended June 30, 2021. In addition, we recognized $8 million in charges associated with the write-off of property, plant and equipment and spare parts and inventory which is included in Restructuring charges on the Unaudited Condensed Consolidated Statement of Operations for the six months ended June 30, 2021.

Luke Mill

On August 1, 2020, we entered into an equipment purchase agreement with Halkali Kagit Karton Sanayi ve Tic. A.S., a company organized under the laws of Turkey, whereby we agreed to sell, and the buyer agreed to purchase, certain equipment at our Luke Mill, primarily including two paper machines. The purchase price was $11 million in cash due at various milestones. As of June 30, 2021, we have received $10 million in non-refundable deposits associated with this sale which

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includes $1 million in the first quarter of 2021 and $1 million in the second quarter of 2021. We received the final payment of $1 million in the third quarter of 2021. We have determined that the control over the use of the acquired assets has transferred to the purchaser and correspondingly recognized the sale of the two paper machines and related assets in June 2021.

We continue to evaluate options for sale of the remaining assets of our Luke Mill.

Changes to Executive Officers

On January 27, 2021, the Board of Directors appointed Randy J. Nebel as Verso’s President and Chief Executive Officer, prior to which he served as our interim President and Chief Executive Officer since September 30, 2020.

On March 5, 2021, Allen J. Campbell, our Senior Vice President and Chief Financial Officer, informed us of his intent to retire on June 30, 2021.

On April 5, 2021, Matthew M. Archambeau notified Verso of his decision to resign as Verso’s Senior Vice President of Manufacturing and Energy. His resignation was effective on April 5, 2021.

On May 6, 2021, the Board of Directors of Verso appointed Kevin M. Kuznicki as Senior Vice President, General Counsel and Secretary.

On June 4, 2021, the Board of Directors appointed Brian D. Cullen to serve as Verso’s Senior Vice President and Chief Financial Officer, effective June 16, 2021.

COVID-19 Pandemic

The COVID-19 Pandemic has impacted our operations and financial results since the first quarter of 2020 and continues to have an impact on us. If a resurgence of COVID-19 related variants occurs or if the vaccines introduced to combat the virus are not effective, the adverse impact on our business, financial position, results of operations and cash flow could be material. We serve as an essential manufacturing business and, as a result, we have continued to be operational during the time of the pandemic in order to meet the ongoing needs of our customers, including those in other essential business sectors, which provide food, medical and hygiene products needed in a global health crisis. The guidelines and orders enacted by federal, state and local governments have, however, impacted demand from retailers, political campaigns, and sports and entertainment events, driving reduced purchases of printed materials and substantially impacting our graphic paper business.

While we cannot reasonably estimate the full impact of COVID-19 on our business, financial position, results of operations and cash flows, we have seen our sales, volume and prices begin to recover during the second quarter of 2021.

Results of Operations

The following table sets forth the historical results of operations of Verso for the periods indicated below. The following discussion of our financial condition and results of operations should be read in conjunction with our Unaudited Condensed Consolidated Financial Statements and notes thereto included elsewhere in this report.

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Three Months Ended June 30, 2021 Compared to Three Months Ended June 30, 2020

	Three Months Ended
	June 30,				Three Months
(Dollars in millions)	2020		2021		$ Change
Net sales	$	268	$	329	$	61
Costs and expenses:
Cost of products sold (exclusive of depreciation and amortization)	271		272		1
Depreciation and amortization	22		17		(5)
Selling, general and administrative expenses	16		20		4
Restructuring charges	—		6		6
Other operating (income) expense	1		3		2
Operating income (loss)	(42)		11		53
Interest expense	—		—		—
Other (income) expense	(5)		(7)		(2)
Income (loss) before income taxes	(37)		18		55
Income tax expense (benefit)	(3)		2		5
Net income (loss)	$	(34)	$	16	$	50

Net sales. Net sales for the three months ended June 30, 2021 increased $61 million, or 23%, compared to the three months ended June 30, 2020, driven by increases in volume and favorable price/mix as the economy began to open, partially offset by $30 million, or 11%, attributable to our idled Duluth and Wisconsin Rapids mills. Total company sales volume was up from 346 thousand tons during the three months ended June 30, 2020, to 369 thousand tons during the same period of the current year. Of the 23 thousand ton volume increase, 82 thousand tons were attributable to an increase in volume, partially offset by 59 thousand tons attributable to our idled Duluth and Wisconsin Rapids mills.

Operating income (loss).  Operating income was $11 million for the three months ended June 30, 2021, an increase of $53 million when compared to operating loss of $42 million for the three months ended June 30, 2020.

Our operating results for the three months ended June 30, 2021 were positively impacted by:

•Favorable price/mix of $31 million driven by price increase realization across all grades, led by pulp price improvements

•Higher sales volume resulting in an increase of $8 million

•Improved operating income from closed and idled mills of $9 million

•Lower depreciation expense of $5 million

•Lower net operating expenses of $11 million driven primarily by improved performance and cost reduction initiatives across our mill system

•Lower planned major maintenance costs of $6 million driven by reduced scope of planned outages

Our operating results for the three months ended June 30, 2021 were negatively impacted by:

•Inflationary costs of $5 million driven by purchased pulp, energy and freight

•Higher Selling, general and administrative expenses of $4 million driven primarily by an increase in incentive expense and other general expenses

•Higher Restructuring charges of $6 million associated with the permanent shutdown of our Duluth Mill in December 2020

•Higher other operating expenses of $2 million primarily related to a loss on the sale of our Duluth Mill of $3 million

Other (income) expense.  Other income for the three months ended June 30, 2021 and 2020 includes income of $6 million and $5 million, respectively, associated with the non-operating components of net periodic pension cost (income).

Income tax expense (benefit).  Income tax expense of $2 million for the three months ended June 30, 2021 primarily reflects estimated tax expense for the period, partially offset by $1 million of tax benefit from the release of valuation allowance against state tax credits. Income tax benefit of $3 million for the three months ended June 30, 2020 primarily reflects estimated taxes for the period and $1 million of valuation allowance recognized against state tax credits. The three months ended June 30, 2020 includes $7 million of income tax expense related to the year ended December 31, 2019. This resulted from recording an

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adjustment for the federal tax effect on deferred tax assets for state net operating losses and state tax credits established in 2019 without a federal tax effect.

Six Months Ended June 30, 2021 Compared to Six Months Ended June 30, 2020

	Six Months Ended
	June 30,				Six Months
(Dollars in millions)	2020		2021		$ Change
Net sales	$	739	$	611	$	(128)
Costs and expenses:
Cost of products sold (exclusive of depreciation and amortization)	698		536		(162)
Depreciation and amortization	45		119		74
Selling, general and administrative expenses	43		35		(8)
Restructuring charges	6		17		11
Other operating (income) expense	(87)		2		89
Operating income (loss)	34		(98)		(132)
Interest expense	—		1		1
Other (income) expense	(9)		(13)		(4)
Income (loss) before income taxes	43		(86)		(129)
Income tax expense (benefit)	23		(12)		(35)
Net income (loss)	$	20	$	(74)	$	(94)

Net sales. Net sales for the six months ended June 30, 2021 decreased $128 million compared to the six months ended June 30, 2020, driven by an increase in net sales at our Escanaba and Quinnesec mills of $64 million, attributable to increased volume and pricing, more than offset by a $192 million sales decline related to our sold and idled mills. Of the $192 million net sales decline, $64 million was a result of the sale of our Androscoggin and Stevens Point mills, $57 million was attributable to our idled Duluth Mill and $71 million was attributable to our idled Wisconsin Rapids Mill. Total company sales volume was down from 900 thousand tons during the six months ended June 30, 2020, to 708 thousand tons during the same period of the current year. Of the 192 thousand ton volume decline, 66 thousand tons were a result of the sale of our Androscoggin and Stevens Point mills in February 2020, 94 thousand tons were attributable to our idled Duluth Mill and 86 thousand tons were attributable to our idled Wisconsin Rapids Mill.

Operating income (loss).  Operating loss was $98 million for the six months ended June 30, 2021, a decrease of $132 million when compared to operating income of $34 million for the six months ended June 30, 2020.

Our operating results for the six months ended June 30, 2021 were positively impacted by:

•Favorable price/mix of $25 million as prices continued to recover during the second quarter of 2021

•While overall sales volume dropped, the impact to net operating income improved $3 million, driven by the elimination of unprofitable volume at closed and idled mills

•Lower net operating expenses of $6 million driven by $23 million in reduced machine downtime, improved performance and cost reduction initiatives across our mill system, partially offset by $17 million in idled and closed mill costs

•Reduced planned major maintenance costs of $7 million driven by reduced scope of planned outages

•Lower Selling, general and administrative expenses of $8 million driven primarily by cost reduction initiatives in connection with the sale of our Androscoggin and Stevens Point mills in February 2020, non-recurring costs associated with the proxy solicitation contest in the first quarter of 2020, lower equity compensation expense and severance costs, partially offset by an increase in incentive expense

Our operating results for the six months ended June 30, 2021 were negatively impacted by:

•Inflationary costs of $7 million driven by purchased pulp, energy and freight, partially offset by lower wood costs

•Higher depreciation expense of $74 million due primarily to $84 million in accelerated depreciation associated with the permanent shutdown of No. 14 paper machine and certain other long-lived assets at our Wisconsin Rapids Mill in February 2021

•Higher Restructuring charges of $11 million primarily associated with the permanent shutdown of our Duluth Mill in December 2020 and of the No. 14 paper machine and certain other long-lived assets at our Wisconsin Rapids Mill in February 2021, partially offset by restructuring costs associated with the closure of our Luke Mill in June 2019

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•Lower other operating income of $89 million, primarily as a result of the $88 million gain on the sale of our Androscoggin and Stevens Point mills in February 2020

Other (income) expense.  Other income for the six months ended June 30, 2021 and 2020 includes income of $12 million and $10 million, respectively, associated with the non-operating components of net periodic pension cost (income).

Income tax expense (benefit).  Income tax benefit of $12 million for the six months ended June 30, 2021 primarily reflects estimated tax benefit for the period, partially offset by $3 million of additional valuation allowance recognized against state tax credits. Income tax expense of $23 million for the six months ended June 30, 2020 primarily reflects estimated taxes for the period and $7 million of additional valuation allowance recognized against state tax credits. The six months ended June 30, 2020 includes $7 million of income tax expense related to the year ended December 31, 2019. This resulted from recording an adjustment for the federal tax effect on deferred tax assets for state net operating losses and state tax credits established in 2019 without a federal tax effect.

Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA

EBITDA consists of earnings before interest, taxes, depreciation and amortization. Adjusted EBITDA reflects adjustments to EBITDA to eliminate the impact of certain items that we do not consider to be indicative of our ongoing performance. We use EBITDA and Adjusted EBITDA as a way of evaluating our performance relative to that of our peers and to assess compliance with our credit facilities. We believe that EBITDA and Adjusted EBITDA are non-GAAP operating performance measures commonly used in our industry that provide investors and analysts with measures of ongoing operating results, unaffected by differences in capital structures, capital investment cycles and ages of related assets among otherwise comparable companies.

We believe that the supplemental adjustments applied in calculating Adjusted EBITDA are reasonable and appropriate to provide additional information to investors.

Because EBITDA and Adjusted EBITDA are not measurements determined in accordance with GAAP and are susceptible to varying calculations, EBITDA and Adjusted EBITDA, as presented, may not be comparable to similarly titled measures of other companies. You should consider our EBITDA and Adjusted EBITDA in addition to, and not as a substitute for, or superior to, our operating or net income (loss), which are determined in accordance with GAAP.

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The following table reconciles Net income (loss) to EBITDA and Adjusted EBITDA for the periods presented:

		Three Months Ended				Six Months Ended
		June 30,				June 30,
(Dollars in millions)		2020		2021		2020		2021
Net income (loss)		$	(34)	$	16	$	20	$	(74)
Income tax expense (benefit)		(3)		2		23		(12)
Interest expense		—		—		—		1
Depreciation and amortization		22		17		45		119
EBITDA		$	(15)	$	35	$	88	$	34
Adjustments to EBITDA:
	Restructuring charges (1)	—		6		6		17
	Luke Mill post-closure costs (2)	3		—		6		8
	Noncash equity award compensation (3)	2		1		4		2
	Gain on Sale of the Androscoggin/Stevens Point Mills (4)	—		—		(88)		—
	Loss on Sale of Duluth Mill (5)	—		3		—		3
	Duluth and Wisconsin Rapids mills idle/post-closure costs(6)	—		4		—		14
	Stockholders proxy solicitation costs (7)	—		—		4		—
	Other severance costs (8)	1		1		5		2
	Other items, net (9)	—		2		1		2
Adjusted EBITDA		$	(9)	$	52	$	26	$	82

(1) For 2020, charges are associated with the closure of our Luke Mill in June 2019. For 2021, charges are primarily associated with the permanent shutdown of our Duluth Mill in December 2020 and of the No. 14 paper machine and certain other long-lived assets at our Wisconsin Rapids Mill in February 2021.

(2) Costs recorded after the permanent shutdown of our Luke Mill that are not associated with product sales or restructuring activities, including $5 million in March 2021 associated with the approval of a consent decree on April 1, 2021 relating to the ongoing environmental remediation and monitoring efforts.

(3) Amortization of noncash incentive compensation.

(4) Gain on the sale of outstanding membership interests in Verso Androscoggin, LLC in February 2020, which included our Androscoggin Mill and Stevens Point Mill.

(5) Loss on the sale of our Duluth Mill in May 2021.

(6) Idle/post-closure costs associated with our Duluth and Wisconsin Rapids mills that are not associated with product sales or restructuring activities.

(7) Costs incurred in connection with the stockholders proxy solicitation contest.

(8) Severance and related benefit costs not associated with restructuring activities.

(9) Other miscellaneous adjustments.

Liquidity and Capital Resources

Our principal cash requirements include ongoing operating costs for working capital needs, capital expenditures for maintenance and strategic investments in our mills and pension contributions. We believe our cash and cash equivalents at June 30, 2021, future cash generated from operations and, to the extent necessary, the availability under our ABL Facility, will be sufficient to meet these needs for at least the next twelve months.

As of June 30, 2021, we had cash and cash equivalents of $117 million while the outstanding balance of our ABL Facility was zero, with $21 million issued in letters of credit and $129 million available for future borrowings.

On February 26, 2020, our Board of Directors authorized up to $250 million of net proceeds from the Pixelle Sale to be used to repurchase outstanding shares of our common stock. In conjunction with the declaration of the special cash dividend of $3.00 per share, or $101 million, on August 5, 2020, our Board of Directors reduced the total amount of the share repurchase authorization from $250 million to $150 million. During the six months ended June 30, 2020 and 2021, we purchased approximately 1.6 million and 0.7 million shares, respectively, of our common stock through open market purchases and 10b-5 programs under the share repurchase authorization at weighted average costs of $14.14 and $13.24 per share, respectively.

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On May 13, 2021, we commenced a modified Dutch auction tender offer to purchase for cash shares of our common stock for an aggregate purchase price of not more than $55 million. The tender offer expired on June 10, 2021. Through the tender offer, we accepted for payment approximately 3.0 million shares at a purchase price of $18.10 per share for an aggregate purchase price of approximately $56 million, including fees and expenses. The shares purchased through the tender offer were immediately retired.

As of June 30, 2021, $56 million of the $150 million share repurchase authorization remained.

On February 5, 2021, our Board of Directors declared a quarterly cash dividend of $0.10 per share of our common stock, which was paid on March 29, 2021, to stockholders of record on March 18, 2021. On May 7, 2021, our Board of Directors declared a quarterly cash dividend of $0.10 per share of our common stock, which was paid on June 29, 2021, to stockholders of record on June 17, 2021. On August 6, 2021, our Board of Directors declared a quarterly cash dividend of $0.10 per share of our common stock, payable on September 28, 2021, to stockholders of record on September 17, 2021. We commenced paying quarterly dividends in the second quarter of 2020.

We make contributions to our pension plan that are sufficient to fund actuarially determined costs, generally equal to the minimum amounts required by the Employee Retirement Income Security Act. We made contributions to our pension plan of $18 million during the six months ended June 30, 2020 and $16 million during the six months ended June 30, 2021. On March 11, 2021, the government signed into law the American Rescue Plan Act of 2021, or “ARPA.” The ARPA provides for pension funding relief which will reduce our expected 2021 required cash contribution to our pension plan to $25 million from $46 million. We expect to make at least $9 million in required contributions to the pension plan in the remainder of 2021.

Our cash flows from operating, investing and financing activities, as reflected on the Unaudited Condensed Consolidated Statements of Cash Flows, are summarized in the following table:

	Six Months Ended
	June 30,
(Dollars in millions)	2020		2021
Net cash provided by (used in):
Operating activities	$	(105)	$	54
Investing activities	303		(1)
Financing activities	(31)		(73)
Change in Cash and cash equivalents and restricted cash	$	167	$	(20)

Operating Activities

Our operating cash flow requirements are primarily for salaries and benefits, the purchase of raw materials including wood fiber, wood pulp, chemicals and energy, and other expenses such as maintenance and warehousing costs. For the six months ended June 30, 2021, net cash provided by operating activities of $54 million primarily reflects adjustments for noncash charges associated with the permanent shutdown of the No. 14 paper machine and certain other long-lived assets, including $84 million in accelerated depreciation and $8 million in other noncash restructuring charges, regular depreciation and amortization of $35 million and net cash provided from working capital related changes of $34 million, partially offset by a net loss of $74 million, $11 million of noncash pension income, $16 million of pension plan contributions and deferred taxes of $12 million. The net cash provided from working capital related changes during the six months ended June 30, 2021 were primarily attributable to decreases in inventory levels, partially offset by an increase in accounts receivable. For the six months ended June 30, 2020, net cash used in operating activities of $105 million primarily reflects a noncash gain of $88 million on the Sale of the Androscoggin/Stevens Point Mills, $9 million of noncash pension income, $18 million of pension plan contributions and net cash used for working capital related changes of $82 million, partially offset by net income of $20 million, noncash depreciation and amortization of $45 million and deferred taxes of $23 million. The net cash used for working capital related changes during the six months ended June 30, 2020 was primarily attributable to increases in inventory levels and payments that reduced our accounts payable and accrued liabilities.

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Investing Activities

For the six months ended June 30, 2021, net cash used in investing activities was $1 million consisted of cash paid for capital expenditures of $18 million, primarily offset by net proceeds from the Sale of Duluth Mill of $6 million, recognition of deposits and proceeds from the sale of Luke Mill equipment of $10 million and proceeds from sale of other assets of $1 million. For the six months ended June 30, 2020, net cash provided by investing activities of $303 million consisted of $340 million in proceeds from the Sale of the Androscoggin/Stevens Point Mills, partially offset by cash paid for capital expenditures of $37 million.

Financing Activities

For the six months ended June 30, 2021, net cash used in financing activities of $73 million primarily reflects $56 million in repurchases of our common stock, $6 million in cash dividends paid to stockholders and $11 million for the acquisition of treasury stock, consisting of $10 million of share repurchases and $1 million associated with the vesting of restricted stock units. For the six months ended June 30, 2020, net cash used in financing activities of $31 million primarily reflects the $27 million for the acquisition of treasury stock, consisting of $23 million of share repurchases and $4 million associated with the vesting of restricted stock units, and $3 million in cash dividends paid to stockholders.

ABL Facility

Verso Paper currently maintains an asset-based revolving credit facility, or, as amended from time to time, our “ABL Facility.” On May 10, 2021, Verso Paper entered into the Third Amendment to the ABL Facility, or the “Third ABL Amendment” to the ABL Facility. As a result of the Third ABL Amendment, the ABL Facility provides for revolving commitments of $200 million, with a $75 million sublimit for letters of credit and a $20 million sublimit for swingline loans. The amount of borrowings and letters of credit available to Verso Paper pursuant to our ABL Facility is limited to the lesser of $200 million or an amount determined pursuant to a borrowing base ($150 million as of June 30, 2021). As of June 30, 2021, there were no borrowings outstanding under our ABL Facility, $21 million issued in letters of credit and $129 million available for future borrowings. Verso Paper may request one or more incremental revolving commitments in an aggregate principal amount up to the greater of (i) $75 million or (ii) the excess of the borrowing base over the revolving facility commitments of $200 million; however, the lenders are not obligated to increase the revolving commitments upon any such request. Availability under our ABL Facility is subject to customary borrowing conditions. Our ABL Facility will mature on February 6, 2024.

Outstanding borrowings under our ABL Facility bear interest at an annual rate equal to, at the option of Verso Paper, either (i) a customary London interbank offered rate plus an applicable margin ranging from 1.25% to 1.75% or (ii) the Federal Funds Rate plus an applicable margin ranging from 0.25% to 0.75%, determined based upon the average excess availability under our ABL Facility. Verso Paper also is required to pay a commitment fee for the unused portion of our ABL Facility of 0.25% per year, based upon the average revolver usage under our ABL Facility. In addition, pursuant to the Third ABL Amendment, certain modifications were made to the existing ABL Facility in order to, among other things, provide for determination of a benchmark replacement interest rate when LIBOR is no longer available, subject to the terms, and upon the satisfaction of conditions, specified therein.

All obligations under our ABL Facility are unconditionally guaranteed by Verso Holding and certain of the subsidiaries of Verso Paper. The security interest with respect to our ABL Facility consists of a first-priority lien on certain assets of Verso Paper, Verso Holding and the other guarantor subsidiaries, including accounts receivable, inventory, certain deposit accounts, securities accounts and commodities accounts.

Our ABL Facility contains financial covenants requiring Verso, among other things, to maintain a minimum fixed charge coverage ratio if availability were to drop below prescribed thresholds. As of June 30, 2021, we were above the prescribed thresholds in our ABL Facility. Our ABL Facility also requires that certain payment conditions, as defined therein, are met in order for Verso to incur debt or liens, pay cash dividends, repurchase equity interest, prepay indebtedness, sell or dispose of assets and make investments in or merge with another company.

If Verso Paper were to violate any of the covenants under our ABL Facility and were unable to obtain a waiver, it would be considered a default after the expiration of any applicable grace period. If Verso Paper were in default under our ABL Facility, then the lenders thereunder may exercise remedies in accordance with the terms thereof. In addition, if Verso Paper were in default under our ABL Facility, no additional borrowings under our ABL Facility would be available until the default was waived or cured. Our ABL Facility provides for customary events of default, including a cross-event of default provision with respect to any other existing debt instrument having an aggregate principal amount that exceeds $25 million.

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Critical Accounting Policies

Our accounting policies are fundamental to understanding management’s discussion and analysis of financial condition and results of operations. Our Unaudited Condensed Consolidated Financial Statements are prepared in conformity with GAAP and follow general practices within the industry in which we operate. The preparation of the financial statements requires management to make certain judgments and assumptions in determining accounting estimates. Accounting estimates are considered critical if the estimate requires management to make assumptions about matters that were highly uncertain at the time the accounting estimate was made, and different estimates reasonably could have been used in the current period, or changes in the accounting estimate are reasonably likely to occur from period to period, that would have a material impact on the presentation of our financial condition, changes in financial condition or results of operations.

For a discussion of our critical accounting policies and estimates, see “Critical Accounting Policies” included in our Annual Report on Form 10-K for the year ended December 31, 2020, under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” We have made no significant changes to our critical accounting policies and estimates from those described in our Annual Report on Form 10-K for the year ended December 31, 2020.

Recent Accounting Pronouncements

See Note 2, “Recent Accounting Pronouncements” in the Notes to our Unaudited Condensed Consolidated Financial Statements included elsewhere in this report.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to market risk from fluctuations in our paper prices, interest rates, energy prices and commodity prices for our inputs.

Paper Prices

Our sales, which we report net of rebates, allowances and discounts, are a function of the number of tons of paper that we sell and the price at which we sell our paper. Paper prices historically have been a function of macroeconomic factors that influence supply and demand, and have been substantially more variable than volume and can change significantly over relatively short time periods. Price is also subject to volatility due to fluctuations in foreign exchange rates of the U.S. dollar relative to other currencies, especially the euro, which can lead to lower average sales price realization.

We are primarily focused on serving the following end-user markets: specialty converters, general commercial print, catalogs and magazine publishers. Coated paper demand is primarily driven by advertising and print media usage. Advertising spending and magazine and catalog circulation tend to correlate with gross domestic product in the United States, as they rise with a strong economy and contract with a weak economy, which impacts media spend which further impacts magazine and catalog subscriptions.

Many of our customers provide us with forecasts, which allows us to plan our production runs in advance, optimizing production over our integrated mill system and thereby reducing costs and increasing overall efficiency. Generally, our sales agreements do not extend beyond the calendar year, and they typically provide for quarterly or semiannual price adjustments based on market price movements.

We reach our end-users through several channels, including merchants, brokers, printers and direct sales to end-users. We sell our products to approximately 200 customers. During the six months ended June 30, 2021, our largest two customers, Central National-Gottesman and Veritiv Corporation, together accounted for 29% of our net sales.

Interest Rates

As of June 30, 2021, we had no borrowings outstanding under our ABL Facility. Borrowings under our ABL Facility bear interest at a variable rate based on LIBOR or the Federal Funds Rate, in each case plus an applicable margin (see “Liquidity and Capital Resources - ABL Facility” above for additional information).

An increase in interest rates would increase the costs of our variable rate debt obligations, if we were borrowing under our ABL Facility. While we may enter into agreements limiting our exposure to higher interest rates, any such agreements may not offer complete protection from this risk. In addition, there is currently uncertainty around whether LIBOR will continue to exist after 2021. However, for U.S. dollar LIBOR, it now appears that the relevant date may be deferred to June 30, 2023 for certain tenors

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(including overnight and one, three, six and 12 months), at which time the LIBOR administrator has indicated that it intends to cease publication of U.S. dollar LIBOR. Despite this potential deferral, the LIBOR administrator has advised that no new contracts using U.S. dollar LIBOR should be entered into after December 31, 2021. In addition, pursuant to the Third ABL Amendment, certain modifications were made to the existing ABL Facility in order to, among other things, provide for determination of a benchmark replacement interest rate when LIBOR is no longer available, subject to the terms, and upon the satisfaction of conditions, specified therein.

Commodity Prices

We are subject to changes in our cost of sales caused by movements in underlying commodity prices. The principal components of our cost of sales are wood fiber, wood pulp, chemicals, energy, labor and maintenance. The cost of commodities, including wood fiber, wood pulp, chemicals and energy, is the most variable component of our cost of sales because prices can fluctuate substantially, sometimes within a relatively short period of time. In addition, our aggregate commodity purchases fluctuate based on the volume of paper that we produce.

Wood Fiber.  We source our wood fiber from a broad group of timberland and sawmill owners located in the regions around our mills. Our cost to purchase wood is affected directly by the market price of wood in our regional markets and indirectly by the variability of fuel cost for the logging and transportation of timber to our facilities. While we have fiber supply agreements in place that ensure delivery of a substantial portion of our wood requirements, purchases under these agreements are typically at market rates.

Wood Pulp. We source bleached wood pulp from market producers to supplement fiber requirements at our mills. The primary pulp procured is Northern Bleached Softwood Kraft, or “NBSK.” We expect weather events and imbalances in supply and demand to create volatility in prices for NBSK from time to time.

Chemicals.  Chemicals utilized in the manufacturing of coated paper include latex, clay, starch, calcium carbonate, caustic soda, sodium chlorate and titanium dioxide. We purchase these chemicals from a variety of suppliers and are not dependent on any single supplier to satisfy our chemical needs. We expect imbalances in supply and demand and weather events to periodically create volatility in prices and supply for certain chemicals.

Energy.  We produce a significant portion of our energy needs for our paper mills from sources such as waste wood, waste heat recovery, liquid biomass from our pulping process and internal energy cogeneration facilities. Our external energy purchases include fuel oil, natural gas, coal and electricity. Our overall energy expenditures are mitigated by our internal energy production capacity and ability to switch between certain energy sources. The use of derivative contracts is also considered as part of our risk management strategy to manage our exposure to market fluctuations in energy prices.

ITEM 4.  CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed in reports that we file and submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

There are inherent limitations to the effectiveness of any disclosure controls and procedures, including the possibility of human error or the circumvention or overriding of the controls and procedures, and even effective disclosure controls and procedures can provide only reasonable assurance of achieving their objectives. Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives.

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, 2021. Based upon this evaluation, and subject to the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of June 30, 2021.

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Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting during the quarter ended June 30, 2021, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II.  OTHER INFORMATION

ITEM 1.   LEGAL PROCEEDINGS

See Note 11 to our Unaudited Condensed Consolidated Financial Statements for information regarding legal proceedings, which information is incorporated by reference in this Item 1.

ITEM 1A.   RISK FACTORS

Except as set forth below, there have been no material changes to the risk factors disclosed in “Part I - Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2020.

Our business could be negatively affected as a result of an unsolicited, non-binding proposal to acquire us.

On July 14, 2021, we issued a press release confirming receipt of an unsolicited, non-binding proposal from Atlas Holdings LLC regarding a potential transaction to acquire all of the outstanding shares of our common stock for $20.00 per share in cash. There can be no assurance that any negotiations between us and Atlas Holdings LLC regarding this proposal will take place, and if such negotiations do take place, there can be no assurance that any transaction with Atlas Holdings LLC will occur or be consummated. In connection with this proposal, we have incurred, and may continue to incur, significant legal and other advisory fees. In addition, this proposal has required, and may continue to require, our management and our Board of Directors to devote significant time and attention to the matter. Further, any perceived uncertainties among current and potential customers, suppliers, employees, and other constituencies as to our future direction as a consequence of this proposal may result in the loss of potential business opportunities and may make it more difficult to attract and retain qualified personnel and business partners. Actions that our Board of Directors has taken, and may take in the future, in response to any offer and related actions by Atlas Holdings LLC or any other offer or proposal may result in litigation against us. These lawsuits may be a significant distraction for our management and employees and may require us to incur significant costs. Moreover, if determined adversely to us, these lawsuits could harm our business and have a material adverse effect on our results of operations. We believe the future trading price of our common stock could be subject to wide price fluctuations, based on uncertainty associated with the proposal.

ITEM 2.   UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On February 26, 2020, our Board of Directors authorized up to $250 million of net proceeds from the Pixelle Sale to be used to repurchase outstanding shares of Verso common stock. In conjunction with the declaration of the special cash dividend of $3.00 per share on August 5, 2020 (see “Liquidity and Capital Resources” above for more information), our Board of Directors reduced the total amount of the share repurchase authorization from $250 million to $150 million. As of June 30, 2021, $56 million of the $150 million authorized remained.

The table below discloses the shares of our common stock repurchased during the second quarter of 2021:

	Total Number  of Shares (or Units) Purchased (1)	Average Price Paid per Share (or Unit) (a)		Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs	Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs (b) (in millions)
April 1, 2021 through April 30, 2021(2)	69,169	$	14.91	69,169	$	111
May 1, 2021 through May 31, 2021	—	—		—	111
June 1, 2021 through June 30, 2021(3)	3,039,712	18.10		3,039,712	56
Total	3,108,881	18.03		3,108,881	56

(1) No shares of our common stock were repurchased during the three months ended June 30, 2021 to meet participant tax withholding obligations on restricted stock units that vested during the quarter.

(2) In April 2021, we purchased approximately 69 thousand shares of our common stock through open market purchases and 10b-5 programs under the share repurchase authorization at weighted average costs of $14.91 per share.

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(3) On May 13, 2021, we commenced a modified Dutch auction tender offer to purchase for cash shares of our common stock for an aggregate purchase price of not more than $55 million and at a price per share of common stock of not less than $16.00 and not more than $18.30 per share. The tender offer expired on June 10, 2021. Through the tender offer, we accepted for payment 3,039,712 shares of our common stock at a purchase price of $18.10 per share for an aggregate purchase price of approximately $55 million, excluding fees and expenses. The shares purchased through the tender offer were immediately retired.

ITEM 3.   DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4.   MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5.   OTHER INFORMATION

Not applicable.

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ITEM 6.   EXHIBITS

The following exhibits are included with this report:

Exhibit Number Description of Exhibit

3.1 Amended and Restated Certificate of Incorporation of Verso Corporation, as amended by the Certificate of Amendment, dated February 18, 2020.(1)

3.2 Amended and Restated Bylaws of Verso Corporation.(2)

4.1 Form of specimen Class A Common Stock certificate.(3)

4.2 Form of specimen Class B Common stock certificate.(4)

4.3 Form of specimen Warrant certificate.(5)

4.4 Warrant Agreement dated as of July 15, 2016, between Verso Corporation and Computershare Inc. and its wholly owned subsidiary, Computershare Trust Company N.A., collectively, as warrant agent.(6)

10.1 Third Amendment to Credit Agreement, dated as of May 10, 2021, among Verso Holding LLC, Verso Paper Holding LLC, each of the other loan parties party thereto, the lenders and other parties thereto, and Wells Fargo Bank, National Association, as administrative agent.(7)

10.2 Offer Letter, dated May 17, 2021, by and between Verso Corporation and Brian D. Cullen.

10.3 Agreement, dated June 16, 2021, by and between Verso Corporation and Brian D. Cullen.

10.4 Restricted Covenant Agreement, dated June 16, 2021, by and between Verso Corporation and Brian D. Cullen.

10.5 Letter Agreement, dated June 23, 2021, by and among Verso Corporation and Matthew Archambeau. (8)

31.1 Certification of Principal Executive Officer of Verso Corporation pursuant to Rule 13a-14(a) under Securities Exchange Act of 1934.

31.2 Certification of Principal Financial Officer of Verso Corporation pursuant to Rule 13a-14(a) under Securities Exchange Act of 1934.

32.1 Certification of Principal Executive Officer of Verso Corporation pursuant to Rule 13a-14(b) under Securities Exchange Act of 1934 and Section 1350 of Chapter 63 of Title 18 of the United States Code.(9)

32.2 Certification of Principal Financial Officer of Verso Corporation pursuant to Rule 13a-14(b) under Securities Exchange Act of 1934 and Section 1350 of Chapter 63 of Title 18 of the United States Code.(9)

101.INS Inline XBRL Instance Document - The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH Inline XBRL Taxonomy Extension Schema.

101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase.

101.DEF Inline XBRL Taxonomy Extension Definition Linkbase.

101.LAB Inline XBRL Taxonomy Extension Label Linkbase.

101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase.

104 Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).

______________________

(1)    Incorporated herein by reference to Exhibit 3.1 to Verso Corporation’s Annual Report on Form 10-K for the year ended December 31, 2020 filed with the SEC on March 1, 2021.

(2)    Incorporated herein by reference to Exhibit 3.1 to Verso Corporation’s Current Report on Form 8-K filed with the SEC on June 26, 2020.

(3)     Incorporated herein by reference to Exhibit 4.1 to Verso Corporation’s Current Report on Form 8‑K filed with the SEC on July 19, 2016.

(4)    Incorporated herein by reference to Exhibit 4.2 to Verso Corporation’s Current Report on Form 8‑K filed with the SEC on July 19, 2016.

(5)    Included in Exhibit 4.4.

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(6)    Incorporated herein by reference to Exhibit 10.4 to Verso Corporation’s Current Report on Form 8‑K filed with the SEC on July 19, 2016.

(7)    Incorporated herein by reference to Exhibit 10.1 to Verso Corporation’s Current Report on Form 8‑K filed with the SEC on May 11, 2021.

(8)    Incorporated herein by reference to Exhibit 10.1 to Verso Corporation’s Current Report on Form 8‑K filed with the SEC on June 29, 2021.

(9)    Furnished herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, each registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: August 6, 2021
	VERSO CORPORATION
	By:	/s/ Randy J. Nebel
		Randy J. Nebel President, Chief Executive Officer and Director (Principal Executive Officer)

By:	/s/ Brian D. Cullen
	Brian D. Cullen Senior Vice President and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)

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EX-10.2

EXHIBIT 10.2

Verso Corporation

8540 Gander Creek Drive

Miamisburg, OH 45342

Randy Nebel

President and Chief Executive Officer

T 937 528 3455

F 937 242 9324

E Randy.Nebel@Versoco.com

W www.versoco.com

May 17, 2021

Brian Cullen

456 S. Poplar Ave.,

Elmhurst, IL 60126

Dear Brian:

This is to confirm the offer of employment with Verso Corporation (“Verso” or the “Company”) that you and I discussed. This offer is contingent on completion of a background investigation and drug screening to be undertaken on behalf of Verso, as well as the verification of your eligibility for employment as required by the Immigration Reform and Control Act of 1986, which can be satisfied by your bringing two forms of acceptable identification (e.g., birth certificate, passport, Social Security card and driver’s license) with you on your first day of employment. The letter also expands upon on a number of items in our compensation and benefits plans.

You will join Verso as our Senior Vice President and CFO, effective TBD, reporting directly to me. You will work principally out of our headquarters in Miamisburg, Ohio.

Your initial annual base salary will be $420,000 paid bi-weekly. Your performance will be reviewed at least annually, and your base salary will be subject to possible increase on the basis of such reviews.

You will also participate in the Verso Incentive Plan (the “VIP”), which is our annual or short-term incentive plan. Your target bonus will be 75 percent of base salary (i.e., initially $315,000). Actual bonuses under the VIP may range from zero to two times target predicated on Company and individual actual performance relative to goals approved annually by the Board and/or its Compensation Committee.

You will be eligible to participate in the Verso Performance Incentive Plan (the “PIP”), which is our long-term incentive plan under which we grant Restricted Stock Units (“RSUs”), subject to the terms and conditions of existing plans. You will be nominated to receive an initial grant of time-based restricted stock units with a grant date value of $300,000 and with a 1-year vesting schedule, and a second grant of time-based restricted stock units with a grant date value of $200,000, to vest 2 years from the grant date. In addition, you will also be eligible for an LTIP grant in grant year 2022, which will be a combination of time-based and performance-based restricted stock units with grant date value equal to 100% of your annual base salary.

You will receive a sign-on bonus of $100,000 to be paid during the first regular pay cycle following your hire date.

Verso maintains a multi-part retirement program, and you will be eligible for all elements of this program. The program includes the Retirement Savings Plan for Non-Union Employees (the “RSP”), which is a qualified 401(k) plan. The Company will provide up to a four and one-half percent match on the amount you elect to defer ($1 for every dollar on the first 3% deferred and $.50 for each dollar on the next 3% deferred). The Company’s matching contributions on your behalf under the RSP will be vested immediately and become non-forfeitable.

You will also be eligible to participate in the Verso Discretionary Annual Contribution Program (DAC), which is also a qualified plan. Under this program, Verso will make an annual contribution to your retirement account under the DAC in an amount equal to 3 percent of your total cash compensation (base salary plus annual bonus plus any other cash compensation) paid during the immediately preceding year. The Company’s contributions on your behalf under the DAC will be subject to a three-year “cliff” vesting provision.

You and your dependents will be covered under our various insured benefit plans immediately upon the effective date of your employment on the terms, and subject to the conditions set forth in each such plan. These plans include group medical, dental, life and disability insurance. You will also be eligible for any other benefit plans in effect for all employees and those in effect for other similarly situated executives.

As a senior officer of the Company, you will be provided with the following executive perquisites; an annual executive physical examination, and access to Executive Financial Counseling per existing Company policy. The policy allows for up to $6,500 reimbursement annually.

Upon the effective date of your employment, you will be eligible for 4 weeks of paid vacation, per the Company’s Vacation Policy, a copy of which will be furnished to you under separate cover.

You will be eligible to receive reimbursement for certain reasonable and customary relocation-related expenses in accordance with the provisions of Verso’s relocation policy, a copy of which will be furnished to you under separate cover and reviewed with you at your convenience.

It should be noted that the terms and conditions of your compensation and benefits may be subject to plan changes by Verso at any time and from time to time.

We are looking forward to having you join us. If you have any questions, please let me know.

Sincerely,

/s/ Randy Nebel

Randy Nebel

President and Chief Executive Officer

*************************************************************************

By virtue of my signature below, I accept this offer of employment.

Name    _/s/ Brian D. Cullen__________________        Date: _May 18, 2021_______

EX-10.3

EXHIBIT 10.3

SEVERANCE AGREEMENT

This SEVERANCE AGREEMENT (“Agreement”) is made and entered into on June 16, 2021, by and between Verso Corporation (“Verso”), a Delaware corporation, and Brian Cullen, an individual (“Employee”).

WHEREAS, Verso desires to establish the terms and conditions upon which Employee may receive certain benefits upon termination of employment, including in the context of a change in control of Verso; and

WHEREAS, Verso and Employee are parties to a Restrictive Covenant Agreement dated June 16, 2021 (the “Restrictive Covenant Agreement”), which provides for certain Employee obligations that survive termination of Employee’s employment with Verso.

NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Verso and Employee hereby agree as set forth below.

1.Certain Definitions. Capitalized terms used, but not defined, elsewhere in this Agreement will for purposes of this Agreement have the meanings defined for such terms below.

1.1.“Bonus Target” means the amount of annual cash incentive bonus that Employee would receive for the full year in which Employee’s termination of employment occurs, if all of Verso’s and Employee’s performance goals applicable to Employee’s incentive bonus for such year (as such bonus arrangement is in effect at time of termination of Employee’s employment) were achieved at the target level of performance.

1.2.“Cause” means that any one or more of the following has occurred:

(1)Employee’s indictment for, conviction of, or pleading guilty or nolo contendere to, a felony (other than motor vehicle offenses the effect of which do not materially impair Employee’s performance of Employee’s duties to Verso).

(2)Employee’s willful failure to substantially perform the material duties of Employee’s position with Verso (other than any such failure resulting from Employee’s incapacity due to physical or mental illness), provided that Employee have been provided written notice of such failure and, if such failure is curable, Employee has not cured the failure to the satisfaction of Verso within 15 days after delivery of such notice.

(3)Employee’s willful failure to obey legal orders consistent with Employee’s position at Verso given in good faith by Verso’s Chief Executive Officer or any other person to whom Employee reports at Verso, directly or indirectly, other than any such failure resulting from incapacity due to physical or mental illness; provided, however, that Employee has been given written notice of such failure and, if such failure is curable, Employee has not cured the failure to the satisfaction of Verso within 15 days after delivery of such notice.

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(4)Employee’s willful misconduct or breach of fiduciary duty (including, without limitation, any act of fraud, embezzlement, or dishonesty) which causes or is reasonably expected to result in material injury to Verso or its business reputation.

(5)Employee’s entering into an agreement or consent decrease or being the subject of any regulatory order that in any of such cases prohibits Employee from serving as an officer or director of a company that has publicly-traded securities.

(6)Employee’s material breach of any agreement that Employee may have with Verso or of any written policies or procedures of Verso, which is injurious to Verso; provided, however, that Employee has been given written notice of such failure and, if such breach is curable, Employee has not cured the breach to the satisfaction of Verso within 15 days after delivery of such notice.

1.3.“Change in Control” means that any one or more of the following have occurred:

(1)A transaction or series of transactions occurs whereby any “person” or related “group” of “persons” (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (“Exchange Act”)), directly or indirectly acquires beneficial ownership, within the meaning of Rule 13d-3 under the Exchange Act, of securities of Verso possessing more than 50% of the total combined voting power of Verso's securities outstanding immediately after such acquisition.

(2)During any period of two consecutive calendar years, the Continuing Directors cease to constitute at least a majority of the board of directors of Verso (“Board”). For purposes of this definition, the term “Continuing Director” means any director who was (a) a member of the Board at the beginning of the two-year period, or (b) elected to the Board by Verso’s stockholders, or (c) appointed to the Board by a majority of the Continuing Directors then serving on the Board; in the case of clause (b) and (c), whose election or appointment to the Board did not occur in connection with any actual or threatened director election contest or proxy solicitation contest or any transaction or proposed transaction involving Verso or any subsidiary of Verso.

(3)Verso, directly, or indirectly through one or more subsidiaries or intermediaries, enters into an agreement to, or consummates, a sale or other disposition of all or substantially all of Verso's assets in any single transaction or series of transactions (including pursuant to a spin-off, split-up or similar transaction) (each, a “Sale of Substantially All Assets”). Without limiting the generality of the foregoing sentence, and subject to the exclusions below, a Sale of Substantially All Assets will include the sale or other disposition, within any two-year period, in any one transaction or series of transactions, of more than two-thirds of the mills (whether determined by reference to mill-generated revenue or by number of mills) owned by Verso and its subsidiaries at the beginning of the two-year period. For purposes of this clause (3), however, in determining whether a Sale of Substantially All Assets has occurred the following assets and mills (or sales of assets and mills, as the case may be) shall be

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disregarded (together, any sales of such assets and mills, including related assets and real estate) are referred to as the “Excluded Sales”): (a) all or any portion of Verso’s mills, including related assets and real estate, in Duluth, MN, Wisconsin Rapids, WI, and Luke MD, (b) all or any portion of Consolidated Water Power Company, including related assets and real estate, and (c) any disposition of assets (including mills) that has been proposed as of, or that occurred prior to, the effective date of this Agreement.

(4)Verso, whether directly involving Verso or indirectly involving Verso through one or more subsidiaries or intermediaries, enters into an agreement to or consummates (a) a merger, combination, consolidation, conversion, exchange of securities, reorganization or business combination, or (b) an acquisition of the assets or stock of another entity, in any single transaction or series of transactions, which event results in the voting securities of Verso outstanding immediately prior thereto failing to continue to represent (either by remaining outstanding or by being converted into voting securities of the surviving or another entity) at least 66% percent of the combined voting power of the voting securities of Verso or such surviving or other entity outstanding immediately after such event.

(5)Any transaction or series of transactions that has the substantial effect of any one or more of the foregoing events occurs.

1.4.“Disability” means Employee’s physical or mental illness or incapacity that, as determined by a physician selected by Verso, has rendered or will render Employee unable to perform Employee’s duties hereunder with or without reasonable accommodation as required by applicable law (including some additional period of leave) for a period of 120 consecutive days (including weekends and holidays) or for 180 days within any twelve (12) month period.

1.5.“Eligible Termination” means a termination of Employee’s employment with Verso either (1) by Verso without Cause (and other than due to Employee’s death or Disability) or (2) by Employee for Good Reason. For clarity, if Employee ceases to be employed by Verso Corporation or one of its subsidiaries (referred to in this paragraph as the “Verso group of companies”), but continues immediately thereafter to be employed by any other company in the Verso group of companies, such transition of Employee’s employment within the Verso group of companies will not be considered a termination of Employee’s employment by Verso.

1.6.“Good Reason” means that any one or more of the following events has occurred without Employee’s written consent:

(1)a material reduction by Verso in Employee’s annual base salary or target-level annual incentive award opportunity, other than a general reduction in the base salaries or target-level annual incentive award opportunities of all or substantially all of Verso’s executives;

(2)a material demotion by Verso with respect to Employee’s job duties and responsibilities; or

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(3)Verso’s material breach of any material agreement between Employee and Verso;

provided, however, that Employee’s termination of his or her employment with Verso will not be considered a termination by Employee for Good Reason unless Employee has: (a) notified Verso in writing of the event(s) claimed to constitute Good Reason, no later than 30 days after the initial occurrence of the event(s); (b) Verso has failed to cure or remedy such event(s), no later than 30 days after its receipt of Employee’s written notice; and (c) Employee has notified Verso in writing that Employee’s is terminating his or her employment for Good Reason on account of such event(s), and Employee actually terminates Employee’s employment with Verso no later than 30 days after the expiration of such 30-day cure period. For clarity, a reduction in duties or responsibilities as a result of the Excluded Sales shall not constitute “Good Reason” pursuant to clause (2) above.

1.7.“Monthly Base Salary” means Employee’s annualized rate of base salary from Verso as in effect immediately prior to termination of Employee’s employment with Verso, divided by 12.

1.8.“Prorated Bonus” means, if Employee’s employment with Verso terminates other than on a December 31, the annual cash incentive award payable to Employee under the applicable annual incentive bonus plan of Verso (such as the Verso Incentive Plan (VIP)) in which Employee participates for the year in which Employee’s termination occurs, which will be (1) prorated on a daily basis with respect to the period of Employee’s employment with Verso during such year, (2) based on Verso’s actual level of achievement of its performance objectives for such year (for the entire year, even though Employee’s employment terminated during the year), (3) based on the assumption that Employee satisfied all of Employee’s performance goals at target level and service criteria for the receipt of such incentive award, and (4) payable to Employee at the same time that Verso pays its annual cash incentive awards under the applicable incentive plan to its executive officers generally (but in no event later than March 15 of the immediately following year).

1.9.“Separation from Service” means a “separation from service” with Verso, as such term is defined in Treasury Regulation 1.409A-1(h), or any successor thereto, promulgated under the Internal Revenue Code of 1986, as amended (“IRC”). For the avoidance of doubt, references to a “separation,” “termination,” “termination of employment” or like terms means a “Separation from Service.”

2.Termination Benefits

2.1.Entitlement. In the event of Employee’s Separation from Service from Verso in an Eligible Termination, Employee will be entitled to the payments and benefits identified in section 2.2, below, subject to the terms and conditions of this Agreement and provided that the Severance Conditions set forth in section 2.7 are met.

2.2.Termination Allowance and Other Benefits. If Employee is entitled to payments and benefits pursuant to this Section 2.2, Verso will pay a termination allowance (“Termination Allowance”) to Employee and provide to Employee the other benefits described in this Section 2.2 (collectively with the Termination Allowance, the “Termination Benefits”). As specified below, the level of

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Termination Benefits provided will be determined based on whether (a) the Separation from Service is not in connection with a Change in Control and not within 12 months after a Change in Control or (b) the Separation from Service is in connection with a Change in Control or occurs within twelve calendar months after the month in which a Change in Control occurs (a “Change in Control Termination”).

(1)Termination Allowance. Employee’s Termination Allowance will equal the sum of (a) Employee’s Monthly Base Salary multiplied by twelve(12) plus (b) Employee’s Bonus Target multiplied by one(1); provided, however, that if the Eligible Termination is a Change in Control Termination, Employee’s Termination Allowance will equal the sum of (x) Employee’s Monthly Base Salary multiplied by eighteen (18) plus (y) Employee’s Bonus Target multiplied by one and one-half (1.5). Verso will pay the Termination Allowance to Employee, less all applicable reductions, taxes and other withholdings, in a lump sum cash payment within 60 days following Employee’s Separation from Service,provided that if the period for Employee to provide (and not revoke) the Release defined below spans two calendar years, the payment will be made in the second of such two years (and within the 60-day period following Employee’s Separation from Service).

(2)Prorated Bonus. Verso will pay the Prorated Bonus to Employee, less all applicable reductions, taxes and other withholdings, when payment of the applicable incentive bonus would have been paid to Employee in the normal course if Employee had remained employed with Verso through the end of the applicable year.

(3)Outplacement Services. Verso will provide Employee with outplacement services using a provider selected by Verso in its reasonable discretion and paid for in full by Verso, (a) for twelve (12) months or (b) if shorter, until Employee becomes re-employed with another employer.

(4)COBRA. If Employee elects to receive continued medical and dental insurance coverage provided by Verso for Employee and Employee’s eligible dependents, pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), then Employee will be reimbursed by Verso for the amount of Employee’s COBRA premiums to continue the coverage that was in effect immediately prior to Employee’s termination of employment with Verso, for twelve (12) months; provided, however, that such period shall be eighteen (18) months in the case of a Change in Control Termination. If elected, such coverage will begin on the first day of the month immediately following the date of termination of Employee’s employment, and Verso’s obligations with respect to such continued coverage will cease upon the first to occur of Employee’s death, the date that Employee becomes eligible for coverage under the health plan of a future employer, or the date that Verso ceases to offer group health coverage to its active executive employees or Verso is otherwise under no obligation to offer COBRA continuation coverage to Employee; provided, further, that Verso’s obligations with respect to such continued coverage are subject to Verso’s ability to comply with applicable law and provide such benefit without resulting in adverse tax consequences.

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2.3.Payment of Termination Benefits; Taxes. The Termination Benefits will be payable as and when prescribed above in section 2.2, subject to any delays and modifications that may be required in accordance with the provisions of this Agreement set forth below under the heading “Tax Matters.” In the event any withholding is required with respect to any Termination Benefits or amounts owed Employee by Verso, Verso may deduct the applicable reductions, taxes and other withholdings from the applicable payment or benefit or from any other amounts otherwise payable to Employee, or it may require Employee to make arrangements reasonably satisfactory to Verso to provide for such withholding amounts. Except for Verso’s withholding rights, Employee will be solely responsible for Employee’s own tax liability with respect to participation in this Agreement.

2.4.No Termination Benefits. Verso will not be obligated to pay or provide any Termination Benefits to Employee under this Agreement if (1) Employee’s employment is terminated under any circumstance other than those set forth in Section 2.2, above, including, without limitation, if Employee quits or resigns for any reason that is not Good Reason, if Verso terminates Employee’s employment for Cause, or in the event Employee’s employment ends due to Employee’s death or Disability, or (2) any of the Severance Conditions are not timely satisfied. Employee agrees to reasonably cooperate with Verso and any physician selected by Verso, including providing such information as Verso or such physician may reasonably request and submitting to an examination by such physician, in connection with a determination as to whether or not Employee has a Disability.

2.5.Other Payments and Benefits. The Termination Benefits are not in lieu of, but are in addition to, (1) amounts owed Employee by Verso, but not yet paid, upon termination of Employee’s employment (for example, Employee’s unpaid salary through the date of termination) and (2) benefits to which Employee may be entitled under any and all other policies, plans and procedures of Verso applicable to Employee, to the extent not duplicative of the benefits set forth herein. The determination of whether a payment or other benefit is duplicative will be within the sole discretion of Verso. For clarity, without limiting the generality of the foregoing sentence, Employee will not be entitled to any benefits under any severance policy for employees of Verso, unless Employee specifically is approved in writing by Verso to receive any such benefits under any such severance policy and such approval is explicit that such benefits are in addition to the benefits provided under this Agreement.

2.6.Equity Programs. This Agreement does not modify or apply as to any stock option, restricted stock, stock unit, or other equity award granted pursuant to the Verso Corporation Performance Incentive Plan (or any successor Verso equity incentive plan). In the event of any termination of employment, any such equity award will be governed by the applicable award agreement and the terms of the plan under which it was granted.

2.7.Severance Conditions. The payment of Termination Benefits is subject to all the following conditions precedent (“Severance Conditions”):

(1)Employee must work until Employee’s last day of employment by Verso as reasonably instructed by Verso, provided that if Employee has accrued vacation that Employee may take, taking such vacation will not be a

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violation of this requirement; and Employee must fulfill in all material respects all of Employee’s duties to Verso in good faith through that date.

(2)Employee must meet, in all material respects through the date that Employee’s Termination Allowance is actually paid to Employee, all of Employee’s obligations under this Agreement, the Restrictive Covenant Agreement, and all other agreements, if any, between Employee and Verso that survive termination of Employee’s employment with Verso.

(3)Employee must execute and not revoke a Waiver and Release of Claims Agreement (“Release”) in accordance with the timing and other requirements set forth in this paragraph. The Release must be signed in connection with the termination of Employee’s employment with Verso and not any earlier than Verso may prescribe. The Release will be in substantially the form attached hereto as Exhibit A, with such changes as Verso may reasonably believe are necessary or advisable to comply with applicable laws, rules and regulations or as Verso may otherwise believe are appropriate and consistent with the purposes and intent of the Release. Verso will provide the final form of Release to Employee no later than ten (10) days following Employee’s termination of employment, and Employee will be required to execute and return the Release to Verso within twenty-one (21) days (or forty-five (45) days if such longer period of time is required to make the Release maximally enforceable under applicable law) after Verso provides the form of Release to Employee.

(4)If as of Employee’s last day of employment with Verso, Employee is no longer or otherwise not party to a Restrictive Covenant Agreement providing that Employee will not compete with Verso for a period of at least eighteen (18) months after Employee’s Separation of Service from Verso, then Employee must execute and not revoke a Restrictive Covenant Agreement requiring Employee not to compete with Verso (or solicit Verso employees or customers) for 18 months after Employee’s Separation from Service, and Employee will be required to execute and return the Restrictive Covenant Agreement to Verso not later than the date on which Employee must provide the Release to Verso. In such circumstances, Verso will provide the form of Restrictive Covenant Agreement to Employee not later than the last day of the period of time in which Verso has to provide the form of Release to Employee.

3.Resignations. Upon termination of Employee’s employment for any reason, Employee will be deemed to have resigned from all offices and directorships, if any, then held with Verso or any of its affiliates, and, at Verso’s request, Employee will execute such documents as are necessary or desirable to effectuate such resignations.

4.Employee’s Representations. Employee hereby represents and warrants all of the following to Verso:

4.1.The execution, delivery and performance of this Agreement by Employee does not and will not conflict with, breach, violate or cause a default under any contract, agreement, instrument, order, judgment or decree to which Employee is a party or by which he or she is bound.

4.2.Employee is not a party to or bound by any employment agreement, non-compete agreement, confidentiality agreement or other restriction with any

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other person or entity, which would be breached by entering into this Agreement.

4.3.Upon the execution and delivery of this Agreement by Verso, this Agreement will be the valid and binding obligation of Employee, enforceable in accordance with its terms. Employee hereby acknowledges and represents that he has consulted with independent legal counsel regarding his or her rights and obligations under this Agreement and that he or she fully understands the terms and conditions contained in this Agreement.

5.Tax Matters.

5.1.Section 409A.

(1)The Termination Benefits described herein are intended to be exempt from or comply with the provisions of Section 409A of the IRC, as well as any regulations or other guidance issued by the Secretary of Treasury and the Internal Revenue Service (collectively, “Section 409A”), so as to avoid the imposition of any tax, penalty or interest under Section 409A. To the extent such section or regulations apply, the provisions hereof will be construed and interpreted accordingly.

(2)It is intended that (a) each payment or installment of payments provided hereunder is a separate “payment” for purposes of Section 409A and (b) the payments satisfy, to the maximum extent possible, the exemptions from the application of Section 409A, including those exceptions provided under Treasury Regulations 1.409A-1(b)(4) (regarding short-term deferrals), 1.409A-1(b)(9)(iii) (regarding the two-times, two year exception for separation pay), and 1.409A-1(b)(9)(v) (regarding reimbursements and other separation pay).

(3)Notwithstanding anything to the contrary herein, if Verso determines that (a) on the date of Employee’s Separation from Service or at such other time that Verso determines to be relevant, Employee is a “specified employee” (as such term is defined under Treasury Regulation 1.409A-1(i)(1)) of Verso and (b) any payments to be provided to Employee pursuant to this Agreement are or may become subject to the additional tax under Section 409A(a)(1)(B) of the IRC or any other taxes or penalties imposed under Section 409A (“Section 409A Taxes”) if provided at the time otherwise required hereunder, then such payments will be delayed until the date that is six months after the date of Employee’s Separation from Service with Verso (or if earlier, Employee’s death) if and to the extent such delay is required to avoid the imputation of any tax, penalty or interest pursuant to Section 409A. Any payments delayed pursuant to this section will be made in a lump sum (without interest) on the first day of the seventh month following Employee’s Separation from Service (or, if earlier, within 30 days after the date of Employee’s death).

(4)Notwithstanding any other provision hereof to the contrary, in no event will any payment hereunder that constitutes “deferred compensation” for purposes of Section 409A and the Treasury Regulations promulgated thereunder be subject to offset (excluding any forfeiture of benefits

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hereunder) by any other amount unless otherwise permitted by Section 409A.

5.2.Section 280G.

(1)If it is determined (as hereafter provided) that any payment or distribution by Verso to or for Employee’s benefit, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise pursuant to or by reason of any other agreement, Agreement, plan, program or arrangement, including without limitation any stock option, stock appreciation right or similar right, or the lapse or termination of any restriction on or the vesting or exercisability of any of the foregoing (a “Payment”) would be subject to the excise tax imposed by Section 4999 of the IRC (or any successor provision thereto) by reason of being contingent on a change in ownership or effective control of Verso or of a substantial portion of the assets of Verso, within the meaning of Section 280G of the IRC (or any successor provision thereto) or to any similar tax imposed by state or local law, or any interest or penalties with respect to such excise tax (such tax or taxes, together with any such interest or penalties, are hereafter collectively referred to as the “Excise Tax”), then, in the event that the after-tax value of all Payments to Employee (such after-tax value to reflect the reduction for the Excise Tax and all federal, state and local income, employment and other taxes on such Payments) would, in the aggregate, be less than the after-tax value to Employee (reflecting a reduction for all such taxes in a like manner) of the Safe Harbor Amount (as defined below), (a) the cash portions of the Payments payable to Employee under this Agreement will be reduced, in the reverse order in which they are due to be paid commencing with the latest such payment, until the Parachute Value (as defined below) of all Payments paid to Employee, in the aggregate, equals the Safe Harbor Amount, and (b) if the reduction of the cash portions of the Payments, payable under this Agreement, to zero would not be sufficient to reduce the Parachute Value of all Payments to the Safe Harbor Amount, then any other Payments payable to Employee under any other agreements, policies, plans, programs or arrangements will be reduced until the Parachute Value of all Payments paid to Employee, in the aggregate, equals the Safe Harbor Amount.

(2)If a reduction in Payments is required pursuant to section 5.2(1), then Payments will first be reduced or eliminated (if and to the extent necessary) by reducing any Payment that is treated as contingent on the change in ownership or control but is not covered by Treas. Reg. Section 1.280G-1 Q/A 24(b) or (c), then from any Payment that is covered by Treas. Reg. Section 1.280G-1 Q/A 24(c), in each case in reverse order beginning with Payments which are to be paid the farthest in time from applicable event. All calculations under this section will be determined by a national accounting firm selected by Verso (which may include Verso’s outside auditors) and will be provided to Verso and Employee within 15 days prior to the date on which any Payment is payable to Employee. Verso will pay all costs to obtain and provide such calculations to Employee and Verso.

(3)For purposes of this section 5.2, (a) the term “Parachute Value” of a Payment will mean the present value (as of the date of the applicable

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VERSO

SEVERANCE AGREEMENT – B. CULLEN

change in ownership or effective control of Verso or of a substantial portion of the assets of Verso, within the meaning of Section 280G of the IRC) of the portion of such Payment that constitutes a “parachute payment” under Section 280G(b)(2) of the IRC, as determined for purposes of determining whether and to what extent the Excise Tax will apply to such Payment; and (b) the term “Safe Harbor Amount” will mean 2.99 times Employee’s “base amount” within the meaning of Section 280G(b)(3) of the IRC.

6.Other Provisions.

6.1.Entire Agreement; Amendments. This Agreement contains the entire agreement of the parties relating to the subject matter herein and supersedes in full and in all respects any prior oral or written agreement, arrangement or understanding between the parties with respect to Employee’s employment with Verso. This Agreement may not be amended or changed orally but only by an agreement in writing signed by the party against whom enforcement of any waiver, change, modification, extension or discharge is sought. For clarity, the Restrictive Covenant Agreement is outside of the scope of the foregoing integration provision.

6.2.Waivers. The waiver by either party of any provision of this Agreement will not operate or be construed as a waiver of any subsequent breach by the other party. No waiver of any provision of this Agreement will be implied from any course of dealing between the parties hereto or from any failure by either party hereto to assert any rights hereunder on any occasion or series of occasions.

6.3.Not an Employment Agreement. This Agreement does not give Employee any right to continued employment with Verso, and all employees remain subject to discharge to the same extent as if this Agreement had never been adopted.

6.4.No Conflicting Agreements. Employee hereby represents and agrees that he is not a party to or bound by any agreement which would affect or otherwise limit the performance of his obligations hereunder.

6.5.Mitigation. If Employee is eligible to receive Termination Benefits under this Agreement, Employee will not be required to mitigate the amount of such Termination Benefits by seeking employment or otherwise.

6.6.Severability and Enforceability. If any provision of this Agreement or the application of any such provision to any party or circumstances will be determined by any court of competent jurisdiction to be invalid and unenforceable to any extent, the remainder of this Agreement or the application of such provision to such person or circumstances other than those to which it is so determined to be invalid and unenforceable, will not be affected thereby, and each provision hereof will be validated and enforced to the fullest extent permitted by law. Employee agrees the restrictions set forth in this Agreement are reasonable and necessary to protect the interests of Verso. If any of the covenants set forth herein are deemed to be invalid or unenforceable for any reason, the parties contemplate that such provisions will be modified to make them enforceable to the fullest extent permitted by law.

6.7.Assignment. The rights and obligations of Verso under this Agreement will inure to the benefit of and will be binding upon the successors and assigns of Verso.

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VERSO

SEVERANCE AGREEMENT – B. CULLEN

Employee acknowledges that the services to be rendered by him are unique and personal, and except as otherwise provided by law, Employee may not assign or transfer, in whole or in part, either directly or by operation of law or otherwise, including without limitation by execution, levy, garnishment, attachment, pledge or in any manner, any interest that Employee have under this Agreement. If Termination Benefits are due under this Agreement to Employee at a time when Verso determines Employee are unable to care for Employee’s affairs, payment may instead be made directly to Employee’s legal guardian or personal representative. If Employee dies after a termination of employment with Verso and at a time when a Termination Benefits are due to Employee under this Agreement, then Verso may make payment of the applicable Termination Benefits to the executor, personal representative or administrators of Employee’s estate.

6.8.Section Headings. The section headings of, and titles of paragraphs and subparagraphs contained in, this Agreement are for the purpose of convenience only, and they neither form a part of this Agreement nor are they to be used in the construction or interpretation thereof.

6.9.Choice of Law and Venue. This Agreement will be governed by, construed under, and enforced in accordance with the internal laws of the State of Ohio, without regard to the conflicts-of-law provisions or principles thereof. This Agreement and its subject matter have substantial contacts with the State of Ohio, and any lawsuit or other legal proceeding with respect to this Agreement must be brought in a court of competent jurisdiction in Hamilton County, Ohio, or in the United States District Court for the Southern District of Ohio (Western Division). In any such lawsuit or other legal proceeding, any such court will have personal jurisdiction over all the parties hereto, and service of process upon them under any applicable law, statute or rule will be deemed valid and good.

6.10.Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE MATTERS CONTEMPLATED HEREBY.

6.11.Electronic Execution; Counterparts. This Agreement may be executed electronically and in separate counterparts, each of which is deemed to be an original and all of which taken together constitute one and the same agreement. Photographic, facsimile and PDF copies of such signed counterparts may be used in lieu of the originals for any purpose.

6.12.Notices. Any notices provided hereunder must be in writing and will be deemed effective upon the earlier of two days following personal delivery (including personal delivery by e-mail provided that receipt is confirmed by the recipient by reply email), or on the date received by the recipient by Federal Express or courier, if sent to the recipient address indicated below:

To Verso:

Verso Corporation

8540 Gander Creek Drive

Miamisburg, Ohio 45342

Attention: President and Chief Executive Officer

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VERSO

SEVERANCE AGREEMENT – B. CULLEN

With a copy to:

Verso Corporation

8540 Gander Creek Drive

Miamisburg, Ohio 45342

Attention: Law Department

To Employee:

Brian Cullen

456 S. Poplar Ave.,

Elmhurst, IL 60126

or to such other address or to the attention of such other person as the recipient will have specified by prior written notice to the sending party.

6.13.Survival. Anything contained in this Agreement to the contrary notwithstanding, the provisions of this Agreement reasonably expected to be performed or applicable after expiration or termination of this Agreement, will survive termination of this Agreement and any termination of Employee’s employment hereunder.

6.14.Legal Counsel. Each party recognizes that this is a legally binding contract and acknowledges and agrees that they have had the opportunity to consult with legal counsel of their choice. Each party has cooperated in the drafting, negotiation and preparation of this Agreement. Hence, in any construction to be made of this Agreement, the same shall not be construed against either party on the basis of that party being the drafter of such language.

IN WITNESS WHEREOF, the parties have hereto executed this Agreement as of the day and year first above written.

Verso Corporation

/s/ Kevin Kuznicki                

Kevin Kuznicki

Senior Vice President and General Counsel

Employee:

/s/ Brian Cullen                

Brian Cullen

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VERSO

SEVERANCE AGREEMENT – B. CULLEN

EXHIBIT A

FORM OF WAIVER AND RELEASE OF CLAIMS AGREEMENT

I, Brian Cullen, am a party to a Severance Agreement (the “Severance Agreement”) with Verso Corporation (“Verso”) dated [_________]. In exchange for the Benefits (as defined below), I freely and voluntarily agree to enter into and be bound by this Waiver and Release of Claims Agreement (this “Waiver”). All capitalized terms used but not defined in this Waiver have the meanings given to them in the Severance Agreement.

1.Ending of Employment. I acknowledge and agree that my employment with Verso ended on [__________] (the “End Date”). I confirmed that I resigned, effective as of the End Date, from each and every position (whether as an employee, director, member, manager, or otherwise) I held with Verso and each of its affiliates.

2.Delivery of Waiver. I acknowledge that Verso delivered this Waiver to me on [__________].

3.Effect on Benefits. In consideration of (among other things) my entering into (and not revoking) this Waiver, Verso will pay or provide to me (in accordance with and subject to the terms and conditions of the Severance Agreement) the applicable severance benefits set forth in Section 2 of the Severance Agreement (the “Benefits”). I acknowledge and agree that unless I sign and do not revoke this Waiver within the time periods described herein, and unless I comply with all the covenants and perform all the obligations imposed on me in the Severance Agreement, this Waiver, the Restrictive Covenant Agreement, and any other contract between Verso and me, I will not be entitled to receive any of the Benefits. I acknowledge and agree that if any portion of the Benefits is not paid as a result of my not complying with all the covenants and obligations imposed on me in the Severance Agreement, this Waiver, the Restrictive Covenant Agreement, and any other contract between Verso and me, my waivers and releases set forth in this Waiver shall continue to be binding and effective.

4.Waiver and Release. Subject in all respects to the Retained Rights (as such term is defined below), which shall remain with me and are not waived, released, discharged or affected in any way by this Waiver, I and anyone claiming through me (including my agents, representatives, assigns, heirs, beneficiaries, executors and administrators) hereby irrevocably, unconditionally and forever waive, release and discharge Verso, its direct and indirect parents, subsidiaries and other affiliates, its and their respective predecessors, successors and assigns, and its and their respective former, current and future stockholders, members, partners, directors, officers, managers, employees, agents, representatives, attorneys and insurers (collectively, the “Releasees”) from any and all claims, causes of action, charges, complaints, demands and rights of any nature whatsoever, whether known or unknown, and whether fixed or contingent, arising from, based on, or relating to my employment with Verso, the ending of my employment with Verso, my status at any time as a holder of any securities of any Releasee, any act or omission of any Releasee occurring prior to or on the date of my signature to this Waiver set forth below (the “Execution Date”), and any dealing, transaction or event involving any Releasee occurring prior to or on the Execution Date, including any and all such claims, causes of action, charges, complaints, demands and rights under the Civil Rights Act of 1866, the Civil Rights Act of 1871, the Fair Labor Standards Act of 1938, the Civil Rights Act of 1964, the Age Discrimination in Employment Act of 1967, the Rehabilitation Act of 1973, the Employee Retirement Income Security Act of 1974, the Worker Adjustment and Retraining Notification Act of 1988, the Older Workers Benefit Protection Act of 1990, the Americans with Disabilities

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Act of 1990, the Family and Medical Leave Act of 1993, the Securities Act of 1933, the Securities Exchange Act of 1934, the Sarbanes-Oxley Act of 2002, all laws of the State of Ohio relating to any subject matter covered by the foregoing laws of the United States of America (including Ohio Revised Code Section 4112), and any other federal, state or local law, rule, regulation or common law, in each case as the same may be amended from time to time. This Waiver includes all wrongful termination and constructive discharge claims, all discrimination claims, all claims for compensation for the time worked and the services performed for Verso and each of the other Releasees, all claims (except the Retained Rights) relating to the Restrictive Covenant Agreement or any contract of employment (whether express or implied) with Verso or any of the other Releasees, all claims for the breach of any covenant of good faith or fair dealing whether express or implied), and any tort of any nature. This Waiver is for any relief or remedy, regardless of how it is denominated, including wages, back pay, front pay, reinstatement, benefits, compensatory damages, punitive or exemplary damages, and attorneys’ fees and expenses. Notwithstanding any provision of this Waiver to the contrary, this Waiver does not apply to any claim or right that may not be waived under applicable law, any claim for my vested interest in any employee benefit plan, program or arrangement maintained by Verso or the benefits providedthereunder, any claim for unemployment insurance benefits or workers’ compensation, any claim arising from or relating to this Waiver, or any claim that may arise after the Execution Date.

5.No Unreported Work; Proper Payment. I represent that I have reported all hours that I have worked for Verso, and that Verso has properly paid me for all of my hours worked.

6.No Unreported Work-Related Injury or Illness. I represent that I have no unreported work-related injury or illness, and I have no basis to report any such injury or illness.

7.No Claim, Charge, Etc. I represent that I have not made or filed any claim, charge, complaint, demand or lawsuit against any Releasee to such Releasee or with the United States Equal Employment Opportunity Commission, the Ohio Civil Rights Commission, or any other federal, state or local governmental authority or court. Except as expressly contemplated in the last sentence of Section 4 of this Waiver or as to the Retained Rights, and only if and to the extent permitted by applicable law, I agree that (a) I will not make any claim, charge, complaint, demand or lawsuit against any Releasee, and (b) if any federal, state or local governmental authority or court assumes jurisdiction of any claim, charge, complaint, demand or lawsuit against any Releasee on my behalf, I will request that such governmental authority or court withdraw from the matter and I will refuse any and all benefits derived therefrom. I hereby irrevocably waive any right that I may have to bring any representative action or to serve in any representative capacity in any class or collective action against any Releasee, such that any action by me or taken on my behalf may proceed, if at all, only as an individual action.

8.No Unlawful Act or Omission; Investigations. I represent that I have not knowingly engaged in any unlawful act or omission in the course of my employment with Verso, and I know of no basis on which any such claim could be asserted. I will cooperate fully in any investigation conducted by or on behalf of Verso into any matter that occurred at any time during my employment with Verso. I understand that this Waiver does not prevent me from cooperating in any investigation conducted by or on behalf of any federal, state, local or foreign governmental authority. To the fullest extent permitted by applicable law, I hereby irrevocably assign to the government of the United States of America any right that I might have to any proceeds or award in connection with any false claim proceeding against Verso or any other Releasee.

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9.Protected Rights. I understand that (a) nothing contained in this Waiver or in any other contract to which I am a party with Verso is intended to limit, or shall be construed as limiting, my ability to file a charge or complaint with the United States Equal Employment Opportunity Commission, the National Labor Relations Board, the Occupational Safety and Health Administration, the Securities and Exchange Commission or any other federal, state or local governmental agency or commission (each a “Government Agency”); (b) this Waiver (and any other contract to which I am a party with Verso) does not limit my ability to communicate with any Government Agency or otherwise participate in any investigation or proceeding that may be conducted by any Government Agency, including providing documents or other information, without notice to Verso; and (c) this Waiver (and any other contract to which I am a party with Verso) does not limit my right to receive an incentive award for information provided to any Government Agency. For clarity, and as required by law, this Waiver (and any other contract to which I am a party with Verso) does not prevent me from accepting a whistleblower award from the Securities and Exchange Commission pursuant to Section 21F of the Securities Exchange Act of 1934, as amended. Notwithstanding the foregoing, I agree to take all reasonable precautions to prevent any unauthorized use or disclosure of any information that may constitute the confidential information of Verso or any of its subsidiaries (as such confidential information is determined pursuant to the Restrictive Covenant Agreement) to any parties other than the Government Agencies. I further understand that the protected rights described in this Section 9 do not include the disclosure of any Verso (or other Releasee) attorney-client privileged communications or attorney work product. In addition, pursuant to the Defend Trade Secrets Act of 2016, I acknowledge that I am hereby notified that an individual will not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that (i) is made in confidence to a federal, state, or local government official (directly or indirectly) or to an attorney solely for the purpose of reporting or investigating a suspected violation of law, or (ii) is made in a complaint or other document filed in a lawsuit or other proceeding, if (and only if) such filing is made under seal. In addition, an individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose the trade secret to the individual’s attorney and use the trade secret information in the court proceeding, if the individual files any document containing the trade secret under seal and does not disclose the trade secret, except pursuant to court order.

10.Return of Company Property. I agree to commit no act or omission that harms, impairs or in any way damages Verso’s (or any of its subsidiaries’) computer systems and resources, including but not limited to, data, servers, storage, personal computers, mobile devices, security systems, network systems, and software. I represent and covenant that I have returned to Verso (a) all physical, computerized, electronic or other types of records, documents, proposals, notes, lists, files and any and all other materials, including computerized electronic information, that refer, relate or otherwise pertain to Verso or any of its subsidiaries that were in my possession, subject to my control or held by me for others; and (b) all property or equipment that I have been issued by Verso or any of its subsidiaries during the course of my employment or property or equipment that I otherwise possessed, including any keys, credit cards, office or telephone equipment, computers, tablets, cell phones/smartphones, other devices, and automobile. I acknowledges that I am not authorized to retain any physical, computerized, electronic or other types of copies of any such physical, computerized, electronic or other types of records, documents, proposals, notes, lists, files or materials, and am not authorized to retain any property or equipment of Verso or any of its subsidiaries. I further agree that I will immediately forward to Verso (and thereafter destroy any electronic copies thereof) any business information relating to Verso or any of its subsidiaries that has been or is inadvertently directed to me following the date of the termination of my employment. Verso will reasonably cooperate with me, if

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requested, to transfer to me the phone numbers associated with my Company cell phones/smartphones.

11.Ongoing Confidentiality, Non-Compete and Other Obligations. I represent and agree that my Restrictive Covenant Agreement remains in force and I will comply with my obligations thereunder.

12.Inventions. I acknowledge and agree that Verso owns all rights to and interests in any Invention that I conceived of, developed or assisted in developing, in whole or in part, while employed with Verso and prior to the End Date that (a) relates to Verso’s (or any of its subsidiaries) current business or anticipated future businesses, (b) involves the use of Verso’s (or any of its subsidiaries) information, equipment, facilities or supplies, (c) is or was created or conceived of, in whole or part, while working on Verso’s (or any of its subsidiaries) time, or (d) results from my work for Verso (or any of its subsidiaries). I represent and agree that I have disclosed to Verso all Inventions that I conceived of, developed or assisted in developing, in whole or in part, while employed with Verso or any of its subsidiaries and prior to the End Date. As used herein, the term “Inventions” means inventions (whether or not patentable), discoveries, innovations, improvements, designs and ideas and related technologies and methodologies (whether or not shown or described in writing or reduced to practice). I understand that my acknowledgement of Verso’s ownership of such Inventions and the required disclosure thereof do not apply to an Invention that does not meet any of the characteristics identified in the first sentence of this Section 12.

13.Enforceability. This Waiver is binding upon and enforceable against me and my agents, representatives, heirs, beneficiaries, executors and administrators.

14.Choice of Law and Jurisdiction. This Waiver will be governed by, construed under, and enforced in accordance with the internal laws of the State of Ohio, without regard to the conflicts-of-law provisions or principles thereof. This Waiver and its subject matter have substantial contacts with the State of Ohio, and any lawsuit or other legal proceeding with respect to this Waiver must be brought in a court of competent jurisdiction in Montgomery County, Ohio, or in the United States District Court for the Southern District of Ohio. In any such lawsuit or other legal proceeding, any such court will have personal jurisdiction over all the parties hereto, and service of process upon them under any applicable law, statute or rule will be deemed valid and good.

15.CONSIDERATION AND CONSULTATION. VERSO HEREBY ADVISES ME THAT BEFORE I SIGN THIS WAIVER, I MAY TAKE 21 DAYS TO CONSIDER WHETHER OR NOT TO SIGN IT. VERSO ALSO HEREBY ADVISES ME TO CONSULT WITH AN ATTORNEY AND TO HAVE THE ATTORNEY REVIEW THIS WAIVER WITH ME BEFORE I SIGN IT. I HEREBY ACKNOWLEDGE THAT I HAVE HAD AN OPPORTUNITY TO CONSULT WITH AN ATTORNEY AND EITHER HAVE HELD SUCH CONSULTATION OR HAVE DETERMINED NOT TO CONSULT WITH AN ATTORNEY.

16.REVOCATION. VERSO HEREBY ADVISES ME THAT I MAY REVOKE THIS WAIVER BY DELIVERING WRITTEN NOTICE OF MY REVOCATION TO [________________], [VICE PRESIDENT, LEGAL AND CORPORATE AFFAIRS], VERSO CORPORATION, 8540 GANDER CREEK DRIVE, MIAMISBURG, OHIO 45342, WITHIN THE 7-DAY PERIOD FOLLOWING THE DAY THAT I SIGN THIS WAIVER (THE “REVOCATION PERIOD”). I UNDERSTAND THAT IF I REVOKE THIS WAIVER WITHIN THE REVOCATION PERIOD, I WILL NOT BE ENTITLED TO RECEIVE THE BENEFITS. I ALSO UNDERSTAND THAT IF I DO NOT REVOKE THIS WAIVER WITHIN THE REVOCATION PERIOD, THIS WAIVER WILL BE FOREVER LEGALLY BINDING AND ENFORCEABLE BEGINNING ON THE DAY IMMEDIATELY

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FOLLOWING THE LAST DAY OF THE REVOCATION PERIOD. THIS WAIVER IS NOT EFFECTIVE OR ENFORCEABLE UNTIL THE REVOCATION PERIOD HAS EXPIRED.

17.Retained Rights. Nothing in this Waiver shall result in any waiver, release, discharge or effect of any kind upon (a) my rights to indemnification and the advancement of expenses as an officer and/or director of Verso and/or as a director or officer of any of its subsidiaries as set forth in Verso Corporation’s Amended and Restated Bylaws, the constituent documents of its subsidiaries,or the Indemnification Agreement dated as of [_____________], between Verso and me, to the maximum extent provided therein, (b) my entitlement toprotection under any and all insurance policies that Verso may elect to maintain generally for the benefit of its directors and officers against all costs, charges and expensesincurred or sustained by me in connection with any action, suit or proceeding to which Imay be made a party by reason of my being or having been a director, officer or employeeof Verso or any of its subsidiaries (other than any dispute, claim or controversy arising under or relating tothe Agreement or this Waiver); or (c) any dispute, claim or controversy arising under this Waiver.

18.Amendments. This Waiver may not be amended or changed orally but only by an agreement in writing signed by Verso.

19.Waivers. The waiver of any provision of this Waiver will not operate or be construed as a waiver of any subsequent breach by the other party. No waiver of any provision of this Waiver will be implied from any course of dealing between the parties hereto or from any failure by either party hereto to assert any rights hereunder on any occasion or series of occasions.

20.Severability and Enforceability. If any provision of this Waiver or the application of any such provision to any party or circumstances will be determined by any court of competent jurisdiction to be invalid and unenforceable to any extent, the remainder of this Waiver or the application of such provision to such person or circumstances other than those to which it is so determined to be invalid and unenforceable, will not be affected thereby, and each provision hereof will be validated and enforced to the fullest extent permitted by law.

21.Assignment. The rights and obligations of Verso under this Waiver will inure to the benefit of and will be binding upon the successors and assigns of Verso. I acknowledge and agree that I may not assign or transfer, in whole or in part, either directly or by operation of law or otherwise, including without limitation by execution, levy, garnishment, attachment, pledge or in any manner, any interest that I have under this Waiver.

22.Section Headings. The section headings of, and titles of paragraphs and subparagraphs contained in, this Waiver are for the purpose of convenience only, and they neither form a part of this Waiver nor are they to be used in the construction or interpretation thereof.

[The signature page follows on the next page.]

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I acknowledge and agree that I have carefully read this Waiver in its entirety, fully understand and agree to all of its terms, conditions and provisions, and have signed this Waiver knowingly, voluntarily and free from any fraud, duress, coercion or mistake of fact. Upon signing this Waiver, I agree to deliver it to [______________], [Vice President, Legal and Corporate Affairs] of Verso Corporation.

Agreed to and Accepted:

[Name]

Date: [_____________, 20__]

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EX-10.4

EXHIBIT 10.4

RESTRICTIVE COVENANT AGREEMENT

This RESTRICTIVE COVENANT AGREEMENT (this “Agreement”) is made and entered into effective as of June 16, 2021 (“Effective Date”), by and between Verso Corporation, a Delaware corporation (“Verso”), and Brian Cullen (“Employee”).

WHEREAS, Verso is willing to employ Employee in a senior executive position, and Employee is willing to accept such employment, contingent on Employee’s execution of this Agreement.

NOW, THEREFORE, in consideration of foregoing and the mutual covenants and agreements hereinafter set forth, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Verso and Employee hereby agree as follows:

1.Definitions. As used below in this Agreement, the terms:

1.1.“Business” will mean the business of coated and supercalendered paper products, the operation of coated and supercalendered paper mills, specialty paper mills producing those specialty paper products that can be manufactured at the specialty paper mills operated by Verso and its subsidiaries (“Verso Group”), and/or the manufacturing of other papers to the extent that at the time of Employee’s termination the Verso Group manufactures, or has undertaken material steps to engage in the manufacturing of, such other papers, anywhere in the world as conducted by the Verso Group, and/or any other business that any member of the Verso Group participated in, or undertook business planning to participate or engage in, at any point since commencement of Employee’s employment with Verso.

1.2.“Protected Information” will mean any and all nonpublic information, confidential information, proprietary information, trade secrets, or other sensitive information (whether in oral, written, electronic, or any other form) concerning any member of the Verso Group and/or any of their respective agents, consultants, contractors, directors, employees, fiduciaries, investors, potential investors, members, officers, partners, principals, and representatives, that (a) Verso takes reasonable measures to maintain in secrecy, (b) is required to be maintained as confidential under governing law or regulation or under an agreement with any third parties, (c) would otherwise appear to a reasonable person to be confidential or proprietary, and/or (d) pertains in any manner to Verso’s business, including but not limited to: Research and Development (as defined below); customers or prospective customers, targeted national accounts, or strategies or data for identifying and satisfying their needs; present or prospective business relationships; present, short term, or long term strategic plans; acquisition candidates; plans for corporate restructuring; products under consideration or development; cost, margin or profit information; data from which any of the foregoing types of information could be derived; human resources (including compensation information and internal evaluations of the performance, capability and potential of Verso employees); business methods, data bases and computer programs. The fact that individual elements of the information that constitutes Protected Information may be generally known does not prevent an integrated compilation of information, whether or not reduced to writing, from being Protected Information if that integrated whole is not generally known.

VERSO

RESTRICTED COVENANT AGREEMENT – B. CULLEN

1.3.“Research and Development” will include, but not be limited to, all (a) short-term and long- term basic, applied and developmental research and technical assistance and specialized research support of customers or active prospects, targeted national accounts, of Verso operating divisions; (b) information relating to: manufacturing and converting processes, methods, techniques and equipment and the improvements and innovations relating to same; quality control procedures and equipment; identification, selection, generation and propagation of tree species having improved characteristics; forest resource management; innovation and improvement to manufacturing and converting processes such as shipping, pulping bleaching chemical recovery papermaking, coating and calendering processes and in equipment for use in such processes; reduction and remediation of environmental discharges; minimization or elimination of solid and liquid waste; use and optimization of raw materials in manufacturing processes; recycling and manufacture of paper products; recycling of other paper or pulp products; energy conservation; computer software and application of computer controls to manufacturing and quality control operations and to inventory control; radio frequency identification and its use in paper and packaging products; and product or process improvement, development or evaluation; and (c) information about methods, techniques, products, equipment, and processes that Verso has learned do not work or do not provide beneficial results (“negative know-how”) as well as those that do work or provide beneficial results.

1.4.“Unauthorized” will mean (a) in contravention of Verso’s policies or procedures; (b) otherwise inconsistent with Verso’s measures to protect its interests in the Protected Information; (c) in contravention of any lawful instruction or directive, either written or oral, of any Verso employee empowered to issue such instruction or directive; (d) in contravention of any duty existing under law or contract; (e) to the detriment of Verso; or (e) for the use or advantage of any entity or person other than the Verso Group.

1.5.“Verso Group” will mean Verso, and/or its subsidiaries, and/or its mills.

2.Confidentiality.

2.1.Employee acknowledges and agrees that by reason of Employee’s employment with Verso, Employee has been and will be entrusted with Protected Information and may develop Protected Information, that such information is valuable and useful to Verso, that it would also be valuable and useful to competitors and others who do not know it and that such information constitutes confidential and proprietary trade secrets of Verso. While an employee or consultant of Verso, or at any time thereafter regardless of the reasons for leaving Verso, Employee agrees not to use or disclose, directly or indirectly, any Protected Information in an Unauthorized manner or for any Unauthorized purpose unless such information will have become generally known in the relevant industry or independently developed with no assistance from, nor as a result of a breach of the covenants and obligations hereunder by, Employee. Further, promptly upon termination, for any reason, of Employee’s employment with Verso or upon the request of Verso, Employee agrees to deliver to Verso all property and materials and copies thereof within Employee’s possession or control that belong to the Verso Group or that contain Protected Information and to permanently delete upon Verso’s request all Protected Information from any computers or other electronic storage media Employee owns or uses.

2

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RESTRICTED COVENANT AGREEMENT – B. CULLEN

2.2.While an employee of Verso and after termination of Employee’s employment with Verso for any reason, Employee agrees not to take any actions that would constitute or facilitate the Unauthorized use or disclosure of Protected Information, including transmitting or posting such Protected Information on the internet, anonymously or otherwise. Employee further agrees to take all reasonable measures to prevent the Unauthorized use and disclosure of Protected Information and to prevent Unauthorized persons or entities from obtaining or using Protected Information.

2.3.If Employee becomes legally compelled (by deposition, interrogatory, request for documents, subpoena, investigation, demand, order or similar process) to disclose any Protected Information, then before any such disclosure may be made, Employee will immediately notify Verso thereof and, at Verso’s expense, will consult with Verso on the advisability of taking steps to resist or narrow such request and cooperate with Verso in any attempt to obtain a protective order or other appropriate remedy or assurance that the Protected Information will be afforded confidential treatment. If such protective order or other appropriate remedy is not obtained, Employee will furnish only that portion of the Protected Information that it is advised by legal counsel is legally required to be furnished.

2.4.In accordance with the Defend Trade Secrets Act, 18 U.S.C. § 1833(b), and other applicable law, nothing in this Agreement, or any other agreement or policy, will prevent Employee from, or expose Employee to criminal or civil liability under federal or state trade secret law for, (a) directly or indirectly sharing any of the Verso Group’s trade secrets or other Protected Information (except information protected by any member of the Verso Group’s attorney-client or work product privilege) with an attorney or with any federal, state, or local government agencies, regulators, or officials, for the purpose of investigating or reporting a suspected violation of law, whether in response to a subpoena or otherwise, without notice to the Verso Group, or (b) disclosing trade secrets in a complaint or other document filed in connection with a legal claim, provided that the filing is made under seal. Further, nothing herein will prevent Employee from discussing or disclosing information related to Employee’s general job duties or responsibilities and/or regarding employee compensation. Employee may disclose Protected Information as required in response to a subpoena or other legal process, in accordance with the terms and procedures set forth in Section 2.3, above.

3.Non-Competition.

3.1.Employee acknowledges and agrees that the Business is worldwide in scope, the Verso Group’s competitors and customers are located throughout the world, and the Verso Group’s strategic planning and Research and Development activities have application throughout the world and are for the benefit of customers and the Business throughout the world, and therefore, the restrictions on Employee’s competition after employment as described below apply to anywhere in the world in which the Verso Group does business. Employee acknowledges that any such competition within that geographical scope will irreparably injure the Verso Group. Employee acknowledges and agrees that, for that reason, the prohibitions on competition described below are reasonably tailored to protect the interests of the Verso Group.

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RESTRICTED COVENANT AGREEMENT – B. CULLEN

3.2.While an employee or consultant of Verso, Employee agrees not to compete in any manner, either directly or indirectly and whether for compensation or otherwise, with the Business or to assist any other person or entity to compete with the Business.

3.3.Upon termination of Employee’s employment with Verso for any reason occurring more than ninety (90) days after the Effective Date, Employee agrees that for a period of twelve (12) months (“Non-Compete Period”) following such termination Employee will not compete with the Business anywhere in the world in which the Verso Group is doing business; in this context “compete” means to do any one or more of the following:

3.3.1.directly or indirectly in any capacity engage in the Business or assisting others to engage in the Business;

3.3.2.engaging in any sales, marketing, Research and Development or managerial duties (including, without limitation, financial, human resources, strategic planning, or operation duties) for, whether as an employee, consultant, or otherwise, any entity that produces, develops, sells, markets or operates in the Business;

3.3.3.owning, managing, operating, controlling or consulting for any entity that engages in the Business; provided, however, that this Section 3(c)(iii) will not prohibit Employee from being a passive owner of not more than 5% of the outstanding stock of any class of a corporation that is publicly traded, so long as Employee has no active participation in the business of such corporation; or

3.3.4.soliciting the business of any actual or active prospective customers, or targeted national accounts of the Verso Group for any product, process or service that is competitive with the Business, whether existing or contemplated for the future, on which Employee has worked, or concerning which Employee has in any manner acquired knowledge or Protected Information about, during the 12 months preceding termination of Employee’s employment.

3.4.It will not be a violation of any provision of Section 3.2 for Employee to accept employment with a non-competitive division or business unit of a multi-divisional company of which one or more divisions or business units are competitors of Verso, so long as Employee does not engage in, oversee, provide input or information regarding, or participate in any manner in the activities described in this paragraph as they relate to any division or business unit that is a competitor of Verso.

3.5.Employee will not assist others in engaging in activities that Employee is not permitted to take.

4.Non-Solicitation/Non-Hire. During Employee’s employment at Verso and for a period of twelve (12) months following the termination of such employment for any reason, Employee agrees that Employee will not, either on Employee’s own behalf or on behalf of any other person or entity, directly or indirectly:

4.1.encourage, induce, solicit, hire or attempt to encourage, induce, or solicit or hire any then current employee of the Verso Group, or otherwise interfere with

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RESTRICTED COVENANT AGREEMENT – B. CULLEN

or encourage any such employee to terminate or limit his or her employment or consulting relationship with Verso; or

4.2.induce, encourage or assist any other person to engage in any of the activities described above; provided, however, that there will be no violation of this Section 4.2 in the event that a Verso Group employee responds to a public solicitation for new hires by an entity with which Employee is associated;

4.3.encourage, induce, solicit, or attempt to encourage, induce, or solicit any former, current or prospective customer of the Verso Group, about whom Employee acquired confidential information during the course of Employee’s employment with Verso, to cease, or reduce the amount of, or change the terms and conditions of, business it does with the Verso Group; or

4.4.interfere with, disrupt, or attempt to interfere with or disrupt the business relationships (contractual or otherwise) existing (now or at any time in the future) between Verso and any third party (including, without limitation, the Verso Group’s customers, vendors, suppliers, licensors, lessors, joint venturers, associates, consultants, agents and partners).

5.Tolling Period of Restrictions. Employee agrees that the periods of non-competition and non- solicitation/non-hire set forth in Sections 3 and 4, respectively, will be extended by the period of violation if Employee is found to be in violation of those provisions.

6.Duty to Show Agreement to Prospective Employer. During Employee’s employment with Verso and for twelve (12) months after the date Employee ceases to be employed with Verso, Employee will, prior to accepting other employment, provide a copy of this Agreement to any recruiter who assists Employee in locating employment other than with Verso and to any prospective employer with which Employee discusses potential employment.

7.Representations, Warranties and Acknowledgements. In addition to the representations, warranties and obligations set forth throughout this Agreement, Employee acknowledges that (a) Protected Information is commercially and competitively valuable to Verso and critical to its success; (b) the Unauthorized use or disclosure of Protected Information or the violation of the covenants set forth in Sections 2, 3, or 4 would cause irreparable harm to Verso; (c) by this Agreement, Verso is taking reasonable steps to protect its legitimate interests in its Protected Information; (d) Employee has developed, or will develop, legally unique relationships with customers of Verso; and (e) nothing herein will prohibit Verso from pursuing any remedies, whether in law or equity, available to Verso for breach or threatened breach of this Agreement. Employee further acknowledges and agrees that, as a senior executive of Verso, Employee performs unique and valuable services to Verso of an intellectual character and that Employee’s services will be difficult for Verso to replace. Employee further acknowledges and agrees that Verso is providing Employee with significant consideration in this Agreement for entering into this Agreement and that Verso’s remedies for any breach of this Agreement are in addition to and not in place of any other remedies Verso may have at law or equity or under any other agreements.

8.General.

8.1.Employee acknowledges and agrees that the parties have attempted to limit Employee’s right to compete only to the extent necessary to protect Verso from

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RESTRICTED COVENANT AGREEMENT – B. CULLEN

unfair competition and protect the legitimate interests of Verso. If any provision or clause of this Agreement or portion thereof will be held by any court of competent jurisdiction to be illegal, void or unenforceable in such jurisdiction, the remainder of such provisions will not thereby be affected and will be given full effect, without regard to the invalid portion. It is the intention of the parties and Employee agrees, that if any court construes any provision or clause of this Agreement or any portion thereof to be illegal, void or unenforceable because of the duration of such provision or the area or matter covered thereby, such court will reduce the duration, area or matter of such provision and in its reduced form, such provision will then be enforceable and will be enforced.

8.2.Employee acknowledges that neither this Agreement nor any provision hereof can be modified, abrogated or waived except in a written document signed by the President and Chief Executive Officer of Verso, or in the event of the absence of such person or the vacancy of such position (or in the event Employee is the President or Chief Executive Officer of Verso), such other person as Verso’s Chairman of the Board or board of directors designates in writing.

8.3.This Agreement will be governed by, construed under, and enforced in accordance with the internal laws of the State of Ohio, without regard to the conflicts-of-law provisions or principles thereof. This Agreement and its subject matter have substantial contacts with the State of Ohio, and any lawsuit or other legal proceeding with respect to this Agreement must be brought in a court of competent jurisdiction in Hamilton County, Ohio, or in the United States District Court for the Southern District of Ohio (Western Division). In any such lawsuit or other legal proceeding, any such court will have personal jurisdiction over all the parties hereto, and service of process upon them under any applicable law, statute or rule will be deemed valid and good.

8.4.This Agreement may be executed electronically and/or in separate counterparts, each of which is deemed to be an original and all of which taken together constitute one and the same agreement.

8.5.This Agreement and any rights thereunder may be assigned by Verso and, if so assigned, will operate to protect the Protected Information and relationships of Verso as well as such information and relationships of the assignee.

8.6.Employee agrees that Verso’s determination not to enforce this or similar agreements as to specific violations will not operate as a waiver or release of Employee’s obligations under this Agreement.

8.7.If any provision of this Agreement or the application of any such provision to any party or circumstances will be determined by any court of competent jurisdiction to be invalid and unenforceable to any extent, the remainder of this Agreement or the application of such provision to such person or circumstances other than those to which it is so determined to be invalid and unenforceable, will not be affected thereby, and each provision hereof will be validated and enforced to the fullest extent permitted by law. Employee agrees the restrictions set forth in this Agreement are reasonable and necessary to protect the interests of Verso. If any of the covenants set forth herein are deemed to be invalid or unenforceable for any reason, the parties contemplate that such provisions will be modified to make them enforceable to the fullest extent permitted by law.

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RESTRICTED COVENANT AGREEMENT – B. CULLEN

8.8.Employee acknowledges and agrees that Verso has advised Employee that Employee may consult with an independent attorney before signing this Agreement.

8.9.This Agreement sets forth the entire agreement of the parties, and fully supersedes any and all prior agreements or understandings between the parties pertaining to the subject matter hereof.

[signatures appear on next page]

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RESTRICTED COVENANT AGREEMENT – B. CULLEN

IN WITNESS WHEREOF, the parties have hereto executed this Restrictive Covenant Agreement as of the day and year first above written.

Verso Corporation

/s/ Kevin Kuznicki                

Kevin Kuznicki

Senior Vice President and General Counsel     

Employee:

/s/ Brian Cullen                

Brian Cullen

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RESTRICTED COVENANT AGREEMENT – B. CULLEN

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO RULE 13a-14(a) UNDER SECURITIES EXCHANGE ACT OF 1934

I, Randy J. Nebel, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Verso Corporation (the “registrant”);

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.    Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 6, 2021

/s/ Randy J. Nebel

Randy J. Nebel
President, Chief Executive Officer and Director
(Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

PURSUANT TO RULE 13a-14(a) UNDER SECURITIES EXCHANGE ACT OF 1934

I, Brian D. Cullen, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Verso Corporation (the “registrant”);

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.    Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 6, 2021

/s/ Brian D. Cullen

Brian D. Cullen
Senior Vice President and Chief Financial Officer
(Principal Financial Officer and Principal Accounting Officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO RULE 13a-14(b) UNDER SECURITIES EXCHANGE ACT OF 1934 AND

SECTION 1350 OF CHAPTER 63 OF TITLE 18 OF UNITED STATES CODE

In connection with the quarterly report on Form 10-Q of Verso Corporation (the “Company”) for the quarter ended June 30, 2021, as filed with the Securities and Exchange Commission (the “SEC”) on the date hereof (the “Report”), I, Randy J. Nebel, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of

operations of the Company.

Date: August 6, 2021

/s/ Randy J. Nebel

Randy J. Nebel
President, Chief Executive Officer and Director
(Principal Executive Officer)

A signed original of this statement has been provided to the Company and will be retained by the Company and furnished to the SEC or its staff upon request.

EX-32.2

EXHIBIT 32.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

PURSUANT TO RULE 13a-14(b) UNDER SECURITIES EXCHANGE ACT OF 1934 AND

SECTION 1350 OF CHAPTER 63 OF TITLE 18 OF UNITED STATES CODE

In connection with the quarterly report on Form 10-Q of Verso Corporation (the “Company”) for the quarter ended June 30, 2021, as filed with the Securities and Exchange Commission (the “SEC”) on the date hereof (the “Report”), I, Brian D. Cullen, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of

operations of the Company.

Date: August 6, 2021

/s/ Brian D. Cullen

Brian D. Cullen
Senior Vice President and Chief Financial Officer
(Principal Financial Officer and Principal Accounting Officer)

A signed original of this statement has been provided to the Company and will be retained by the Company and furnished to the SEC or its staff upon request.

XML

Cover Page - shares	6 Months Ended
	Jun. 30, 2021	Jul. 30, 2021
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2021
Document Transition Report	false
Entity File Number	001-34056
Entity Registrant Name	VERSO CORPORATION
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	75-3217389
Entity Address, Address Line One	8540 Gander Creek Drive
Entity Address, City or Town	Miamisburg
Entity Address, State or Province	OH
Entity Address, Postal Zip Code	45342
City Area Code	877
Local Phone Number	855-7243
Title of 12(b) Security	Class A common stock, par value $0.01 per share
Trading Symbol	VRS
Security Exchange Name	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Bankruptcy Proceedings, Reporting Current	true
Entity Common Stock, Class A, Shares Outstanding		29,387,674
Amendment Flag	false
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q2
Current Fiscal Year End Date	--12-31
Entity Central Index Key	0001421182

XML

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions	Jun. 30, 2021	Dec. 31, 2020
Current assets:
Cash and cash equivalents	$ 117	$ 137
Accounts receivable, net	109	83
Inventories	160	224
Assets held for sale	6	17
Prepaid expenses and other assets	10	5
Total current assets	402	466
Property, plant and equipment, net	501	613
Deferred tax assets	134	122
Intangibles and other assets, net	38	44
Total assets	1,075	1,245
Current liabilities:
Accounts payable	90	80
Accrued and other liabilities	83	92
Current maturities of long-term debt and finance leases	1	1
Total current liabilities	174	173
Long-term debt and finance leases	3	4
Pension benefit obligation	323	350
Other long-term liabilities	36	34
Total liabilities	536	561
Commitments and contingencies (Note 11)
Equity:
Preferred stock -- par value $0.01 (50,000,000 shares authorized, no shares issued)	0	0
Common stock -- par value $0.01 (210,000,000 Class A shares authorized with 35,877,533 shares issued and 33,133,649 outstanding on December 31, 2020 and 33,207,306 shares issued and 29,619,127 outstanding on June 30, 2021; 40,000,000 Class B shares authorized with no shares issued and outstanding on December 31, 2020 and June 30, 2021)	0	0
Treasury stock -- at cost (2,743,884 shares on December 31, 2020 and 3,588,179 shares on June 30, 2021)	(50)	(39)
Paid-in-capital	651	705
Retained deficit	(122)	(42)
Accumulated other comprehensive income	60	60
Total equity	539	684
Total liabilities and equity	$ 1,075	$ 1,245

XML

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Jun. 30, 2021	Dec. 31, 2020
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized (in shares)	50,000,000	50,000,000
Preferred stock, shares issued (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Treasury stock, shares (in shares)	3,588,179	2,743,884
Class A
Common stock, shares authorized (in shares)	210,000,000	210,000,000
Common shares issued (in shares)	33,207,306	35,877,533
Common stock, shares outstanding (in shares)	29,619,127	33,133,649
Common Class B
Common stock, shares authorized (in shares)	40,000,000	40,000,000
Common shares issued (in shares)	0	0
Common stock, shares outstanding (in shares)	0	0

XML

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Income Statement [Abstract]
Net sales	$ 329	$ 268	$ 611	$ 739
Costs and expenses:
Cost of products sold (exclusive of depreciation and amortization)	272	271	536	698
Depreciation and amortization	17	22	119	45
Selling, general and administrative expenses	20	16	35	43
Restructuring charges	6		17	6
Other operating (income) expense	3	1	2	(87)
Operating income (loss)	11	(42)	(98)	34
Interest expense	0	0	1	0
Other (income) expense	(7)	(5)	(13)	(9)
Income (loss) before income taxes	18	(37)	(86)	43
Income tax expense (benefit)	2	(3)	(12)	23
Net income (loss)	$ 16	$ (34)	$ (74)	$ 20
Income (loss) per common share:
Basic (usd per share)	$ 0.47	$ (0.99)	$ (2.29)	$ 0.56
Diluted (usd per share)	$ 0.47	$ (0.99)	$ (2.29)	$ 0.56
Weighted average common shares outstanding (in thousands)
Basic (shares)	32,093	34,548	32,566	34,827
Diluted (shares)	32,315	34,548	32,566	35,023

XML

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Statement of Comprehensive Income [Abstract]
Net income (loss)	$ 16	$ (34)	$ (74)	$ 20
Other comprehensive income (loss), net of tax	0	0	0	0
Comprehensive income (loss)	$ 16	$ (34)	$ (74)	$ 20

XML

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($) $ in Millions	Total	Class A	Common Stock Class A	Treasury Stock	Paid-in-Capital	Retained Earnings (Deficit)	Accumulated Other Comprehensive Income (Loss)
Common shares beginning balance (in shares) at Dec. 31, 2019			34,949,000
Treasury shares beginning balance (in shares) at Dec. 31, 2019				245,000
Beginning balance at Dec. 31, 2019	$ 987		$ 0	$ (5)	$ 698	$ 172	$ 122
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	20					20
Treasury shares (in shares)				1,852,000
Treasury shares	(27)			$ (27)
Common stock issued for restricted stock (in shares)			817,000
Dividends and dividend equivalents declared	(3)					(3)
Equity award expense	4				4
Common shares ending balance (in shares) at Jun. 30, 2020			35,766,000
Treasury shares ending balance (in shares) at Jun. 30, 2020				2,097,000
Ending balance at Jun. 30, 2020	981		$ 0	$ (32)	702	189	122
Common shares beginning balance (in shares) at Mar. 31, 2020			35,766,000
Treasury shares beginning balance (in shares) at Mar. 31, 2020				717,000
Beginning balance at Mar. 31, 2020	1,036		$ 0	$ (12)	700	226	122
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	(34)					(34)
Treasury shares (in shares)				1,380,000
Treasury shares	(20)			$ (20)
Dividends and dividend equivalents declared	(3)					(3)
Equity award expense	2				2
Common shares ending balance (in shares) at Jun. 30, 2020			35,766,000
Treasury shares ending balance (in shares) at Jun. 30, 2020				2,097,000
Ending balance at Jun. 30, 2020	$ 981		$ 0	$ (32)	702	189	122
Common shares beginning balance (in shares) at Dec. 31, 2020		35,877,533	35,878,000
Treasury shares beginning balance (in shares) at Dec. 31, 2020	2,743,884			2,744,000
Beginning balance at Dec. 31, 2020	$ 684		$ 0	$ (39)	705	(42)	60
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	(74)					(74)
Treasury shares (in shares)				844,000
Treasury shares	(11)			$ (11)
Common stock issued for restricted stock (in shares)			369,000
Dividends and dividend equivalents declared	(6)					(6)
Repurchase of common stock (in shares)			(3,040,000)
Repurchase of common stock	(56)				(56)
Equity award expense	$ 2				2
Common shares ending balance (in shares) at Jun. 30, 2021		33,207,306	33,207,000
Treasury shares ending balance (in shares) at Jun. 30, 2021	3,588,179			3,588,000
Ending balance at Jun. 30, 2021	$ 539		$ 0	$ (50)	651	(122)	60
Common shares beginning balance (in shares) at Mar. 31, 2021			36,239,000
Treasury shares beginning balance (in shares) at Mar. 31, 2021				3,519,000
Beginning balance at Mar. 31, 2021	582		$ 0	$ (49)	706	(135)	60
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	16					16
Treasury shares (in shares)				69,000
Treasury shares	(1)			$ (1)
Common stock issued for restricted stock (in shares)			8,000
Dividends and dividend equivalents declared	(3)					(3)
Repurchase of common stock (in shares)			(3,040,000)
Repurchase of common stock	(56)				(56)
Equity award expense	$ 1				1
Common shares ending balance (in shares) at Jun. 30, 2021		33,207,306	33,207,000
Treasury shares ending balance (in shares) at Jun. 30, 2021	3,588,179			3,588,000
Ending balance at Jun. 30, 2021	$ 539		$ 0	$ (50)	$ 651	$ (122)	$ 60

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UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020
Cash Flows From Operating Activities:
Net income (loss)	$ (74)	$ 20
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization	119	45
Noncash restructuring charges	8	0
Net periodic pension cost (income)	(11)	(9)
Pension plan contributions	(16)	(18)
Amortization of debt issuance cost	1	0
Equity award expense	2	4
Gain on Sale of Androscoggin/Stevens Point Mills	0	(88)
Loss on Sale of Duluth Mill	3	0
Deferred taxes	(12)	23
Changes in assets and liabilities:
Accounts receivable, net	(25)	18
Inventories	60	(61)
Prepaid expenses and other assets	(4)	(2)
Accounts payable	9	(18)
Accrued and other liabilities	(6)	(19)
Net cash provided by (used in) operating activities	54	(105)
Cash Flows From Investing Activities:
Proceeds from sale of assets	1	0
Capital expenditures	(18)	(37)
Net proceeds from Sale of Androscoggin/Stevens Point Mills	0	340
Net proceeds from Sale of Duluth Mill	6	0
Recognition of deposits and proceeds from sale of Luke Mill equipment	10	0
Net cash provided by (used in) investing activities	(1)	303
Cash Flows From Financing Activities:
Borrowings on ABL Facility	0	36
Payments on ABL Facility	0	(36)
Principal payment on financing lease obligation	0	(1)
Repurchase of common stock	(56)	0
Acquisition of treasury stock	(11)	(27)
Dividends paid to stockholders	(6)	(3)
Net cash provided by (used in) financing activities	(73)	(31)
Change in Cash and cash equivalents and restricted cash	(20)	167
Cash and cash equivalents and restricted cash at beginning of period	139	44
Cash and cash equivalents and restricted cash at end of period	119	211
Supplemental cash flow disclosures:
Total interest paid	1	0
Total income taxes paid	0	0
Noncash investing and financing activities:
Right-of-use assets obtained in exchange for new finance lease liabilities	0	0
Right-of-use assets obtained in exchange for new capitalized operating lease liabilities	1	7
Net right-of-use assets re-measurement	$ 2	$ 0

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SUMMARY OF BUSINESS AND BASIS OF PRESENTATION

6 Months Ended

Jun. 30, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

SUMMARY OF BUSINESS AND BASIS OF PRESENTATION

SUMMARY OF BUSINESS AND BASIS OF PRESENTATION

Nature of Business — Verso is a producer of graphic paper, specialty paper, packaging paper and Northern Bleached Hardwood Kraft, or “NBHK,” pulp. Verso’s products are used primarily in media, marketing applications and commercial printing applications. Uses include catalogs, magazines, high-end advertising brochures, direct-mail advertising, and specialty applications, such as labeling and other special applications. Verso’s NBHK pulp is used to manufacture printing, writing and specialty paper grades, tissue and other products. Verso operates in the pulp and paper market segments. However, Verso determined that the operating income (loss) of the pulp segment is immaterial for disclosure purposes. Verso’s assets are utilized across segments in an integrated mill system and are not identified by segment or reviewed by management on a segment basis. Verso operates primarily in North America.

Sale of Androscoggin Mill and Stevens Point Mill — On November 11, 2019, Verso and Verso Paper entered into a membership interest purchase agreement, or the “Purchase Agreement,” with Pixelle Specialty Solution LLC, or “Pixelle,” whereby Verso and Verso Paper agreed to sell to Pixelle, or the “Pixelle Sale,” or “Sale of Androscoggin/Stevens Point Mills,” all of the outstanding membership interests in Verso Androscoggin, LLC an indirect wholly owned subsidiary of Verso and the entity that, as of the closing date of the Pixelle Sale, held all the assets primarily related to Verso’s Androscoggin Mill located in Jay, Maine, and Stevens Point Mill, located in Stevens Point, Wisconsin. The transaction was approved by Verso’s stockholders on January 31, 2020 and closed on February 10, 2020 (see Note 5).

Duluth Mill and Wisconsin Rapids Mill — On June 9, 2020, Verso announced plans to indefinitely idle its mills in Duluth, Minnesota and Wisconsin Rapids, Wisconsin, while exploring viable and sustainable alternatives for both mills including restarting, selling or permanently closing one or both mills. Verso’s decision to reduce its production capacity was driven by the accelerated decline in graphic paper demand, primarily resulting from the COVID-19 pandemic. The production capacity of the Duluth Mill was approximately 270,000 tons of supercalendered/packaging paper and the production capacity of the Wisconsin Rapids Mill is approximately 540,000 tons of coated and packaging paper. Verso idled production at the Duluth Mill on July 1, 2020 and at the Wisconsin Rapids Mill on July 27, 2020. On December 31, 2020, Verso decided to permanently shut down the Duluth Mill, which was subsequently sold on May 13, 2021 (see Note 5). On February 8, 2021, Verso decided to permanently shut down the No. 14 paper machine and certain other long-lived assets at the Wisconsin Rapids Mill (see Note 10). Verso continues to operate the facility at the Wisconsin Rapids Mill to convert paper produced at the Quinnesec and Escanaba mills to sheets for the commercial print market.

COVID-19 Pandemic — The COVID-19 Pandemic has impacted Verso’s operations and financial results since the first quarter of 2020 and continues to have an impact on the Company. If a resurgence of COVID-19 related variants occurs or if the vaccines introduced to combat the virus are not effective, the adverse impact on Verso’s business, financial position, results of operations and cash flow could be material. Verso serves as an essential manufacturing business and, as a result, Verso’s mills have continued to be operational during the time of the pandemic in order to meet the ongoing needs of its customers, including those in other essential business sectors, which provide food, medical and hygiene products needed in a global health crisis. The guidelines and orders enacted by federal, state and local governments have, however, impacted demand from retailers, political campaigns, and sports and entertainment events, driving reduced purchases of printed materials and substantially impacting Verso’s graphic paper business.

While Verso cannot reasonably estimate the full impact of COVID-19 on the business, financial position, results of operations and cash flows, Verso has seen its sales, volume and prices begin to recover during the second quarter of 2021.

Basis of Presentation — This report contains the Unaudited Condensed Consolidated Financial Statements of Verso as of December 31, 2020 and June 30, 2021 and for the three and six months ended June 30, 2020 and 2021. The December 31, 2020 Unaudited Condensed Consolidated Balance Sheet data was derived from audited financial statements, but it does not include all disclosures required annually by accounting principles generally accepted in the United States of America, or “GAAP.” In Verso’s opinion, the Unaudited Condensed Consolidated Financial Statements include all adjustments that are necessary for the fair presentation of Verso’s respective financial condition, results of operations and cash flows for the interim periods presented. Except as disclosed in the notes to the Unaudited Condensed Consolidated Financial Statements, such adjustments are of a normal, recurring nature. Intercompany balances and transactions are eliminated in consolidation. The results of

operations and cash flows for the interim periods presented may not necessarily be indicative of full-year results. These financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto of Verso contained in its Annual Report on Form 10-K for the year ended December 31, 2020.

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RECENT ACCOUNTING PRONOUNCEMENTS

6 Months Ended

Jun. 30, 2021

Accounting Changes and Error Corrections [Abstract]

RECENT ACCOUNTING PRONOUNCEMENTS

RECENT ACCOUNTING PRONOUNCEMENTS

Accounting Guidance Adopted in 2021

Accounting Standards Codification Topic 740, Income Taxes. In December 2019, the Financial Accounting Standards Board issued Accounting Standards Update 2019-12, Simplifying the Accounting for Income Taxes, which removes certain exceptions for investments, intraperiod allocations and interim calculations, and adds guidance to reduce the complexity in accounting for income taxes. Verso adopted this guidance on January 1, 2021, and the effect on the Unaudited Condensed Consolidated Financial Statements was not material.

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REVENUE RECOGNITION

6 Months Ended

Jun. 30, 2021

Revenue from Contract with Customer [Abstract]

REVENUE RECOGNITION

REVENUE RECOGNITION

The following table presents revenue disaggregated by product included on the Unaudited Condensed Consolidated Statements of Operations:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
(Dollars in millions)	2020		2021		2020		2021
Paper	$	219	$	289	$	640	$	539
Packaging	18		6		42		13
Pulp	31		34		57		59
Total Net sales	$	268	$	329	$	739	$	611

The following table presents revenue disaggregated by sales channel included on the Unaudited Condensed Consolidated Statements of Operations:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
(Dollars in millions)	2020		2021		2020		2021
End-users and Converters	$	110	$	99	$	280	$	186
Brokers and Merchants	108		178		327		328
Printers	50		52		132		97
Total Net sales	$	268	$	329	$	739	$	611

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SUPPLEMENTAL FINANCIAL STATEMENT INFORMATION

6 Months Ended

Jun. 30, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

SUPPLEMENTAL FINANCIAL STATEMENT INFORMATION

SUPPLEMENTAL FINANCIAL STATEMENT INFORMATION Restricted Cash — As of December 31, 2020 and June 30, 2021, $2 million of restricted cash was included in Intangibles and other assets, net on the Unaudited Condensed Consolidated Balance Sheets primarily related to asset retirement obligations in the state of Michigan. These cash deposits are required by the state and may only be used for the future closure of a landfill. As of both June 30, 2020 and 2021, Cash and cash equivalents and restricted cash on the Unaudited Condensed Consolidated Statements of Cash Flows includes restricted cash of $2 million.

Inventories — The following table summarizes inventories by major category:

	December 31,		June 30,
(Dollars in millions)	2020		2021
Raw materials	$	45	$	30
Work-in-process	31		21
Finished goods	125		91
Replacement parts and other supplies	23		18
Inventories	$	224	$	160

Property, plant and equipment — Depreciation expense for the three and six months ended June 30, 2020 was $20 million and $42 million, respectively. Depreciation expense for three and six months ended June 30, 2021 was $16 million and $117 million, respectively. Depreciation expense for the six months ended June 30, 2021 includes $84 million in accelerated depreciation associated with the permanent shutdown of the No. 14 paper machine and certain other long-lived assets at the Wisconsin Rapids Mill (see Note 10). Property, plant and equipment as of June 30, 2020 and 2021 include $4 million and $3 million, respectively, of capital expenditures that were unpaid and included in Accounts payable and Accrued and other liabilities on the Unaudited Condensed Consolidated Balance Sheets.

Income Taxes — Income tax benefit for the three months ended June 30, 2020 was $3 million and income tax expense for the six months ended June 30, 2020 was $23 million. Income tax expense for the three months ended June 30, 2021 was $2 million and income tax benefit for the six months ended June 30, 2021 was $12 million. During the three and six months ended June 30, 2020, Verso recognized $1 million and $7 million, respectively, of additional valuation allowance against state tax credits. During the three months ended June 30, 2021, Verso reduced the valuation allowance against state tax credits by $1 million. During the six months ended June 30, 2021, the net additional valuation allowance against state tax credits was $3 million.

Related Party Transactions — Net sales for the three and six months ended June 30, 2021, include sales to a related party of $18 million and $33 million, respectively. Accounts receivable as of December 31, 2020 and June 30, 2021, include $4 million and $3 million, respectively, associated with this related party.

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DISPOSITIONS

6 Months Ended

Jun. 30, 2021

Discontinued Operations and Disposal Groups [Abstract]

DISPOSITIONS

DISPOSITIONS

Sale of Androscoggin Mill and Stevens Point Mill

On February 10, 2020, Verso completed the Pixelle Sale, selling all of the outstanding membership interests in Verso Androscoggin, LLC, an indirect wholly owned subsidiary of Verso and the entity that, as of the closing date of the Pixelle Sale, held all the assets primarily related to Verso’s Androscoggin Mill located in Jay, Maine and Verso’s Stevens Point Mill, located in Stevens Point, Wisconsin. The Pixelle Sale did not qualify as a discontinued operation. As consideration for the Pixelle Sale, Verso received $352 million in cash, which reflected certain adjustments related to Verso’s estimates of cash, indebtedness and working capital of Verso Androscoggin, LLC and Pixelle assumed $37 million of Verso’s unfunded pension liabilities, which reflected certain adjustments in connection with the completed transfer of the unfunded pension liabilities during the year ended December 31, 2020.

During the six months ended June 30, 2020, Verso received $340 million in net cash proceeds from the Pixelle Sale, consisting of $346 million in cash reduced by $6 million in selling costs and recognized an $88 million gain on the sale. In connection with the Pixelle Sale, Verso provided certain transition services to Pixelle and recognized $2 million and $3 million for these services during the three and six months ended June 30, 2020, respectively, on the Unaudited Condensed Consolidated Statements of Operations. During the three months ended June 30, 2020, $1 million of these transition services was recognized as a reduction of Cost of products sold and $1 million was recognized as a reduction of Selling, general and administrative expenses. During the six months ended June 30, 2020, $1 million of these transition services was recognized as a reduction Cost of products sold and $2 million was recognized as a reduction of Selling, general and administrative expenses.

Luke Mill Equipment and Other Asset Sales

On August 1, 2020, Verso entered into an equipment purchase agreement with Halkali Kagit Karton Sanayi ve Tic. A.S., or the “Purchaser,” a company organized under the laws of Turkey, whereby Verso agreed to sell, and the Purchaser agreed to purchase, certain equipment at Verso’s Luke Mill, primarily including two paper machines. The purchase price was $11 million in cash due at various milestones. As of June 30, 2021, Verso has received $10 million in non-refundable deposits associated with this sale which includes $1 million in the first quarter of 2021 and $1 million in the second quarter of 2021. Verso received the final payment of $1 million in the third quarter of 2021. Management determined that the control over the use of the acquired assets has transferred to the Purchaser and correspondingly recognized the sale of the two paper machines and related assets in June 2021. Verso is exploring options for disposal of the remaining assets of the Luke Mill. As of December 31, 2020 and June 30, 2021, Verso classified $17 million and $6 million, respectively, in Assets held for sale on the Unaudited Condensed Consolidated Balance Sheets.

Sale of Duluth Mill

On May 13, 2021, Verso Minnesota Wisconsin LLC, an indirect wholly owned subsidiary of Verso, entered into an asset purchase agreement with ST Paper 1, LLC and sold all of the assets primarily related to Verso’s Duluth Mill located in Duluth, Minnesota for $7 million in cash, less costs to sell of $1 million. The sale, including related selling costs, resulted in a loss of $3 million, which is included in Other operating (income) expense on the Unaudited Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2021.

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DEBT

6 Months Ended

Jun. 30, 2021

Debt Disclosure [Abstract]

DEBT

DEBT

As of December 31, 2020 and June 30, 2021, Verso Paper had no outstanding borrowings on its ABL Facility (as defined below).

ABL Facility

Verso Paper is the borrower under a $200 million asset-based revolving credit facility, or the “ABL Facility.” From February 6, 2019 until May 10, 2021, the ABL Facility provided for revolving commitments of $350 million, with a $100 million sublimit for letters of credit and a $35 million sublimit for swingline loans. Verso Paper could request one or more incremental revolving commitments in an aggregate principal amount up to the greater of (i) $75 million or (ii) the excess of the borrowing base over the revolving facility commitments of $350 million; however, the lenders were not obligated to increase the revolving commitments upon any such request. On May 10, 2021, Verso Paper entered into a third amendment to the ABL Facility, or the “Third ABL Amendment.” As a result of the Third ABL Amendment, the ABL Facility provides for revolving commitments of $200 million, with a $75 million sublimit for letters of credit and a $20 million sublimit for swingline loans. The amount of borrowings and letters of credit available to Verso Paper pursuant to the ABL Facility is limited to the lesser of $200 million or an amount determined pursuant to a borrowing base ($150 million as of June 30, 2021). As of June 30, 2021, there were no borrowings outstanding under the ABL Facility, with $21 million issued in letters of credit and $129 million available for future borrowings. Availability under the ABL Facility is subject to customary borrowing conditions. The ABL Facility will mature on February 6, 2024.

Outstanding borrowings under the ABL Facility bear interest at an annual rate equal to, at the option of Verso Paper, either (i) a customary London interbank offered rate plus an applicable margin ranging from 1.25% to 1.75% or (ii) the Federal Funds Rate plus an applicable margin ranging from 0.25% to 0.75%, determined based upon the average excess availability under the ABL Facility. Verso Paper is also required to pay a commitment fee for the unused portion of the ABL Facility of 0.25% per year, based upon the average revolver usage under the ABL Facility. In addition, pursuant to the Third ABL Amendment, certain modifications were made to the existing ABL Facility in order to, among other things, provide for determination of a benchmark replacement interest rate when LIBOR is no longer available, subject to the terms, and upon the satisfaction of conditions, specified therein.

All obligations under the ABL Facility are unconditionally guaranteed by Verso Holding and certain of the subsidiaries of Verso Paper. The ABL Facility is secured by a first-priority lien on certain assets of Verso Paper, Verso Holding and the other guarantor subsidiaries, including accounts receivable, inventory, certain deposit accounts, securities accounts and commodities accounts.

The ABL Facility contains financial covenants requiring Verso, among other things, to maintain a minimum fixed charge coverage ratio if availability were to drop below prescribed thresholds. The ABL Facility also requires that certain payment

conditions, as defined therein, are met in order for Verso to incur debt or liens, pay cash dividends, repurchase equity interest, prepay indebtedness, sell or dispose of assets and make investments in or merge with another company.

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EARNINGS PER SHARE

6 Months Ended

Jun. 30, 2021

Earnings Per Share [Abstract]

EARNINGS PER SHARE

EARNINGS PER SHARE

The following table provides a reconciliation of basic and diluted income (loss) per common share:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2020		2021		2020		2021
Net income (loss) available to common stockholders (in millions)	$	(34)	$	16	$	20	$	(74)
Weighted average common shares outstanding - basic (in thousands)	34,548		32,093		34,827		32,566
Dilutive shares from stock awards (in thousands)	—		222		196		—
Weighted average common shares outstanding - diluted (in thousands)	34,548		32,315		35,023		32,566
Basic income (loss) per share	$	(0.99)	$	0.47	$	0.56	$	(2.29)
Diluted income (loss) per share	$	(0.99)	$	0.47	$	0.56	$	(2.29)

As a result of the net loss from continuing operations for the three months ended June 30, 2020 and the six months ended June 30, 2021, 0.8 million restricted stock units were excluded from the calculations of diluted earnings per share as their inclusion would be anti-dilutive. As of June 30, 2020 and 2021, Verso had 1.8 million warrants outstanding at an adjusted exercise price per share of $27.86 and $20.89, respectively (see Note 9). As a result of the exercise price of the warrants exceeding the average market price of Verso’s common stock during the three and six months ended June 30, 2020 and 2021, 1.8 million and 2.4 million shares, respectively, were excluded from the calculations of diluted earnings per share as their inclusion would be anti-dilutive.

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RETIREMENT BENEFITS

6 Months Ended

Jun. 30, 2021

Retirement Benefits [Abstract]

RETIREMENT BENEFITS

RETIREMENT BENEFITS

The following table summarizes the components of net periodic pension cost (income) for the periods presented:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
(Dollars in millions)	2020		2021		2020		2021
Service cost	$	—	$	1	$	1	$	1
Interest cost	11		9		23		19
Expected return on plan assets	(16)		(15)		(33)		(31)
Net periodic pension cost (income)	$	(5)	$	(5)	$	(9)	$	(11)

Verso makes contributions to its pension plan that are sufficient to fund actuarially determined costs, generally equal to the minimum amounts required by the Employee Retirement Income Security Act. Contributions to the pension plan during the three and six months ended June 30, 2020 were $10 million and $18 million, respectively. Contributions to the pension plan during the three and six months ended June 30, 2021 were $9 million and $16 million, respectively. On March 11, 2021, the government signed into law the American Rescue Plan Act of 2021, or “ARPA.” The ARPA provides for pension funding relief that will reduce Verso’s expected 2021 required cash contributions to its pension plan to $25 million from $46 million. Verso expects to make at least $9 million in required contributions to the pension plan in the remainder of 2021.

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EQUITY

6 Months Ended

Jun. 30, 2021

Equity [Abstract]

EQUITY

EQUITY

Equity Awards

During the six months ended June 30, 2021, Verso granted 0.3 million time-based restricted stock units and 0.2 million performance-based restricted stock units to its executives and certain senior managers. The performance-based restricted stock unit awards granted vest on the performance determination date following the end of the performance period, as measured using an adjusted EBITDAP (earnings before interest, taxes, depreciation, amortization and pension expense/income) metric and a return on invested capital metric over a 3-year period ending December 31, 2023. The vesting criteria of the performance-based

restricted stock unit awards meet the definition of a performance condition for accounting purposes. The number of shares which will ultimately vest at the vesting date ranges from 0% to 200% of the number of performance-based restricted stock units granted based on performance during the 3-year cumulative performance period. The compensation expense associated with these performance awards is currently estimated at 100%.

On March 5, 2021, Verso modified certain outstanding restricted stock unit awards as part of a retention arrangement for its former Chief Financial Officer who retired on June 30, 2021. As modified, his performance-based restricted stock units will remain outstanding and may vest on a pro-rata basis based on Verso’s achievement of established targets. In addition, the next tranche of his time-based restricted stock units vested at June 30, 2021. The foregoing changes were considered a modification and resulted in a revaluation of his 2019 and 2020 performance-based restricted stock units to a fair value of $0.67 and $8.66, respectively, and a revaluation of each of his 2018, 2019 and 2020 time-based restricted stock units that vested as a result of the modification to a fair value of $13.32.

Verso recognized equity award expense of $2 million and $4 million for the three and six months ended June 30, 2020, respectively, and $1 million and $2 million for the three and six months ended June 30, 2021, respectively. As of June 30, 2021, there was approximately $7 million of unrecognized compensation cost related to the 0.8 million non-vested restricted stock units, which is expected to be recognized over the weighted average period of 2.2 years.

Time-based Restricted Stock Units

Changes to non-vested time-based restricted stock units for the six months ended June 30, 2021 were as follows:

	Restricted Stock	Weighted Average
	Units	Grant Date
Shares (in thousands)	Outstanding	Fair Value
Non-vested at December 31, 2020	421	$	9.95
Granted (1)	264	13.86
Vested	(253)	9.39
Forfeited	(60)	11.79
Non-vested at June 30, 2021(2)	372	13.28

(1) Includes 6 thousand dividend equivalent units on certain time-based restricted stock unit awards for dividends related to the stock units granted but not yet vested at the time cash dividends were paid.

(2) Includes the modified value of the time-based restricted stock units associated with the retention agreement for the former Chief Financial Officer.

Performance-based Restricted Stock Units

Changes to non-vested performance-based restricted stock units for the six months ended June 30, 2021 were as follows:

	Restricted Stock	Weighted Average
	Units	Grant Date
Shares (in thousands)	Outstanding	Fair Value
Non-vested at December 31, 2020	424	$	12.21
Granted (1)	212	13.01
Incremental shares vested (2)	10	—
Vested	(143)	12.87
Forfeited	(65)	10.59
Non-vested at June 30, 2021 (3)	438	11.33

(1) Includes 6 thousand dividend equivalent units on certain performance-based restricted stock unit awards for dividends related to the stock units granted but not yet vested at the time cash dividends were paid.

(2) Incremental shares are a result of performance at 113% of the target level of shares subject to the performance based restricted stock units.

(3) Includes the modified value of the performance-based restricted stock units associated with the retention agreement for the former Chief Financial Officer.

Share Repurchase Authorization and Dividends

On February 26, 2020, Verso’s Board of Directors authorized up to $250 million of net proceeds from the Pixelle Sale to be used to repurchase outstanding shares of Verso common stock. In conjunction with the declaration of the special cash dividend of $3.00 per share, or $101 million, on August 5, 2020, Verso’s Board of Directors reduced Verso’s total share repurchase

authorization from $250 million to $150 million. During the six months ended June 30, 2020, Verso purchased under its share repurchase authorization approximately 1.6 million of its common stock through open market purchases and 10b-5 programs at a weighted average cost of $14.14 per share. During the six months ended June 30, 2021, Verso purchased under its share repurchase authorization (i) approximately 0.7 million shares of its common stock through open market purchases and 10b-5 programs at a weighted average cost of $13.24 per share and (ii) approximately 3.0 million shares at a purchase price of $18.10 per share through the modified Dutch auction tender offer discussed above. As of June 30, 2021, $56 million of the $150 million authorized remained.

On May 13, 2021, Verso commenced a modified Dutch auction tender offer to purchase for cash shares of its common stock for an aggregate purchase price of not more than $55 million and at a price per share of common stock of not less than $16.00 and not more than $18.30 per share. The tender offer expired on June 10, 2021. Through the tender offer, Verso accepted for purchase approximately 3.0 million shares of its common stock at a purchase price of $18.10 per share for an aggregate purchase price of approximately $56 million, including fees and expenses. The shares of common stock purchased through the tender offer were immediately retired. The excess purchase price over par value was recorded as a reduction to Paid-in capital on the Unaudited Condensed Consolidated Balance Sheet as of June 30, 2021.

On February 5, 2021, Verso’s Board of Directors declared a quarterly cash dividend of $0.10 per share of Verso's common stock, which was paid on March 29, 2021, to stockholders of record on March 18, 2021. On May 7, 2021, Verso’s Board of Directors declared a quarterly cash dividend of $0.10 per share of Verso’s common stock, which was paid on June 29, 2021, to stockholders of record on June 17, 2021. On August 6, 2021, Verso’s Board of Directors declared a quarterly cash dividend of $0.10 per share of Verso’s common stock, payable on September 28, 2021, to stockholders of record on September 17, 2021. Verso commenced paying quarterly dividends in the second quarter of 2020.

Warrants

On July 15, 2016, warrants to purchase up to an aggregate of 1.8 million shares of Class A common stock were issued to holders of first-lien secured debt at an initial exercise price of $27.86 per share and a seven-year term, subject to customary anti-dilution adjustments. As a result of Verso’s various share repurchases, including the modified Dutch auction tender offer, and dividend payments since the issuance of the warrants, as of June 30, 2021, the number of shares of Verso common stock issuable upon exercise of each warrant increased to 1.33 shares of common stock, for an aggregate of approximately 2.4 million shares of common stock, and the warrant exercise price was reduced to $20.89 per share. If all warrants were exercised, Verso would issue 2.4 million shares of Class A common stock and receive $50 million in proceeds. The warrants expire on July 15, 2023. As of June 30, 2021, no warrants have been exercised.

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RESTRUCTURING CHARGES

6 Months Ended

Jun. 30, 2021

Restructuring and Related Activities [Abstract]

RESTRUCTURING CHARGES

RESTRUCTURING CHARGES

Wisconsin Rapids Mill - On February 8, 2021, Verso decided to permanently shut down the No. 14 paper machine and certain other long-lived assets at its paper mill in Wisconsin Rapids, Wisconsin, while continuing to explore viable and sustainable alternatives with the remaining assets, including its converting operation, No. 16 paper machine and other remaining long-lived assets. This decision was made in response to the continued accelerated decline in printing and writing paper demand. The decision to permanently shut down the No. 14 paper machine and certain other long-lived assets, which have been idle since July 2020, permanently reduced Verso’s total annual production capacity by approximately 185,000 tons of coated paper.

In connection with the permanent shutdown of the No. 14 paper machine at the Wisconsin Rapids Mill, Verso recognized $84 million of accelerated depreciation which is included in Depreciation and amortization on the Unaudited Condensed Consolidated Statement of Operations for the six months ended June 30, 2021.

The following table details the charges incurred related to the shutdown of No. 14 paper machine and certain other long-lived assets as included in Restructuring charges on the Unaudited Condensed Consolidated Statements of Operations:

	Three Months Ended		Six Months Ended		Cumulative
(Dollars in millions)	June 30, 2021		June 30, 2021		Incurred
Property, plant and equipment, net	$	—	$	5	$	5
Write-off of spare parts and inventory	—		3		3
Total restructuring costs	$	—	$	8	$	8

Duluth Mill — On December 31, 2020, Verso decided to permanently shut down the paper mill in Duluth, Minnesota while continuing with efforts to sell the mill. Management’s decision to permanently shut down the Duluth Mill was made in response to the continued accelerated decline in printing and writing paper demand resulting from the COVID-19 pandemic. The closure of the Duluth Mill, which had been idle since July 2020, reduced Verso’s total annual production capacity by approximately 270,000 tons of supercalendered/packaging paper. In May 2021, Verso completed the sale of the Duluth Mill (see Note 5).

The following table details the charges incurred related to the Duluth Mill closure as included in Restructuring charges on the Unaudited Condensed Consolidated Statements of Operations:

	Three Months Ended		Six Months Ended		Cumulative
(Dollars in millions)	June 30, 2021		June 30, 2021		Incurred
Property, plant and equipment, net	$	—	$	—	$	3
Severance and benefit costs	—		—		1
Write-off of spare parts and inventory	—		—		2
Write-off of purchase obligations and commitments	5		7		8
Other costs	1		2		2
Total restructuring costs	$	6	$	9	$	16

The following table details the changes in the restructuring reserve liabilities related to the permanent shutdown of the Duluth Mill which are included in Accrued and other liabilities on the Unaudited Condensed Consolidated Balance Sheet:

	Six Months Ended
(Dollars in millions)	June 30, 2021
Beginning balance of reserve	$	2
Severance and benefit payments	(1)
Purchase obligations	7
Other costs	2
Payments on other costs	(2)
Ending balance of reserve	$	8

Closure of Luke Mill — On April 30, 2019, Verso announced that it would permanently shut down its paper mill in Luke, Maryland in response to the continuing decline in customer demand for the grades of coated freesheet paper produced at the Luke Mill, along with rising input costs, a significant influx of imports and rising compliance costs and infrastructure challenges associated with environmental regulation. Verso completed the shutdown and closure of the Luke Mill in June 2019, which reduced Verso’s coated freesheet production capacity by approximately 450,000 tons and eliminated approximately 675 positions.

The following table details the charges incurred related to the Luke Mill closure as included in Restructuring charges on the Unaudited Condensed Consolidated Statements of Operations:

	Six Months Ended
	June 30,				Cumulative
(Dollars in millions)	2020		2021		Incurred
Property, plant and equipment, net	$	—	$	—	$	10
Severance and benefit costs	(1)		—		18
Write-off of spare parts and inventory	—		—		9
Write-off of purchase obligations and commitments	—		—		1
Other costs(1)	7		—		19
Total restructuring costs	$	6	$	—	$	57

(1) Other costs primarily relate to activities associated with the shutdown of property, plant and equipment, such as draining, cleaning, dismantling, securing and disposing of such assets. Other costs for the six months ended June 30, 2020 includes $6 million for the final cleaning and shutdown of various storage tanks.

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COMMITMENTS AND CONTINGENCIES

6 Months Ended

Jun. 30, 2021

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

General Litigation — Verso is involved from time to time in legal proceedings incidental to the conduct of its business. While any proceeding or litigation has the element of uncertainty, Verso believes that the outcome of any of these lawsuits or claims that are pending or threatened or all of them combined (other than those that cannot be assessed due to their preliminary nature) will not have a material effect on the Unaudited Condensed Consolidated Financial Statements.

In November 2019, the state of West Virginia asserted in an administrative enforcement action that three above-ground storage tanks at Verso’s Luke Mill leaked and that Verso had failed to take certain actions to prevent and report the release of pollutants into the North Branch of the Potomac River. In March 2020, the Potomac Riverkeeper Network (“PRKN”) filed a federal lawsuit against Verso alleging the improper handling, storage and disposal of wastes generated at the Luke Mill. In May 2020, Maryland joined the PRKN lawsuit and in July 2020, Maryland obtained dismissal of a lawsuit that it previously had filed with respect to the same facts. The Luke Mill sits on the border of West Virginia and Maryland, and it was closed in June 2019.

On April 1, 2021, a consent decree was approved and entered by the court in the federal lawsuit, setting forth the terms agreed by Verso with the PRKN and the Maryland Department of the Environment (“the Department”), to settle the claims by PRKN and the state of Maryland. Pursuant to the consent decree, Verso has agreed to pay an aggregate of $1 million in penalties and fees to the Department and PRKN. Verso has also agreed to reimburse the Department for any future response and oversight costs at the Luke Mill up to a maximum of $25,000 for the first year after the effective date of the consent decree and $20,000 per year thereafter until termination of monitoring oversight under the consent decree. In addition to the penalties and fees paid pursuant to the consent decree, Verso also agreed to continue its ongoing remedial activities at the Luke Mill and to monitor the site for at least three years after completion of its remedial efforts.

Verso is currently engaged in settlement negotiations with the state of West Virginia. Verso believes it is nearing an agreement with the state of West Virginia to settle claims related to the environmental impacts at the Luke Mill.

As a result of the consent decree approval on April 1, 2021, Verso revised its estimates of costs related to the ongoing environmental remediation and monitoring efforts and recorded $4 million in Cost of products sold on the Unaudited Condensed Consolidated Statement of Operations during the six months ended June 30, 2021. As of June 30, 2021, $8 million of environmental remediation costs are included on the Unaudited Condensed Consolidated Balance Sheet, including $3 million in Accrued and other liabilities and $5 million in Other long-term liabilities. As of December 31, 2020, $5 million of environmental remediation costs, which included the cost related to the consent decree mentioned above, are included in Accrued and other liabilities on the Unaudited Condensed Consolidated Balance Sheet.

In connection with the closure of former idled mills, claims were asserted against Verso relating to certain contractual obligations. Verso recognized $4 million and $6 million for the three and six months ended June 30, 2021, respectively, included in Restructuring charges on the Consolidated Statements of Operations, associated with contractual obligations. Verso does not believe the claims are reasonable and will continue to defend its position and does not believe any additional charges will be material.

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SUMMARY OF BUSINESS AND BASIS OF PRESENTATION (Policies)

6 Months Ended

Jun. 30, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Nature of Business

Nature of Business — Verso is a producer of graphic paper, specialty paper, packaging paper and Northern Bleached Hardwood Kraft, or “NBHK,” pulp. Verso’s products are used primarily in media, marketing applications and commercial printing applications. Uses include catalogs, magazines, high-end advertising brochures, direct-mail advertising, and specialty applications, such as labeling and other special applications. Verso’s NBHK pulp is used to manufacture printing, writing and specialty paper grades, tissue and other products. Verso operates in the pulp and paper market segments. However, Verso determined that the operating income (loss) of the pulp segment is immaterial for disclosure purposes. Verso’s assets are utilized across segments in an integrated mill system and are not identified by segment or reviewed by management on a segment basis. Verso operates primarily in North America.

Basis of Presentation

Basis of Presentation — This report contains the Unaudited Condensed Consolidated Financial Statements of Verso as of December 31, 2020 and June 30, 2021 and for the three and six months ended June 30, 2020 and 2021. The December 31, 2020 Unaudited Condensed Consolidated Balance Sheet data was derived from audited financial statements, but it does not include all disclosures required annually by accounting principles generally accepted in the United States of America, or “GAAP.” In Verso’s opinion, the Unaudited Condensed Consolidated Financial Statements include all adjustments that are necessary for the fair presentation of Verso’s respective financial condition, results of operations and cash flows for the interim periods presented. Except as disclosed in the notes to the Unaudited Condensed Consolidated Financial Statements, such adjustments are of a normal, recurring nature. Intercompany balances and transactions are eliminated in consolidation. The results of operations and cash flows for the interim periods presented may not necessarily be indicative of full-year results. These financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto of Verso contained in its Annual Report on Form 10-K for the year ended December 31, 2020.

Recent Accounting Developments

Accounting Guidance Adopted in 2021

Accounting Standards Codification Topic 740, Income Taxes. In December 2019, the Financial Accounting Standards Board issued Accounting Standards Update 2019-12, Simplifying the Accounting for Income Taxes, which removes certain exceptions for investments, intraperiod allocations and interim calculations, and adds guidance to reduce the complexity in accounting for income taxes. Verso adopted this guidance on January 1, 2021, and the effect on the Unaudited Condensed Consolidated Financial Statements was not material.

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REVENUE RECOGNITION (Tables)

6 Months Ended

Jun. 30, 2021

Revenue from Contract with Customer [Abstract]

Disaggregation of Revenue

The following table presents revenue disaggregated by product included on the Unaudited Condensed Consolidated Statements of Operations:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
(Dollars in millions)	2020		2021		2020		2021
Paper	$	219	$	289	$	640	$	539
Packaging	18		6		42		13
Pulp	31		34		57		59
Total Net sales	$	268	$	329	$	739	$	611

The following table presents revenue disaggregated by sales channel included on the Unaudited Condensed Consolidated Statements of Operations:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
(Dollars in millions)	2020		2021		2020		2021
End-users and Converters	$	110	$	99	$	280	$	186
Brokers and Merchants	108		178		327		328
Printers	50		52		132		97
Total Net sales	$	268	$	329	$	739	$	611

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SUPPLEMENTAL FINANCIAL STATEMENT INFORMATION (Tables)

6 Months Ended

Jun. 30, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Inventories by Major Category

The following table summarizes inventories by major category:

	December 31,		June 30,
(Dollars in millions)	2020		2021
Raw materials	$	45	$	30
Work-in-process	31		21
Finished goods	125		91
Replacement parts and other supplies	23		18
Inventories	$	224	$	160

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EARNINGS PER SHARE (Tables)

6 Months Ended

Jun. 30, 2021

Earnings Per Share [Abstract]

Schedule of Earnings Per Share, Basic and Diluted

The following table provides a reconciliation of basic and diluted income (loss) per common share:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2020		2021		2020		2021
Net income (loss) available to common stockholders (in millions)	$	(34)	$	16	$	20	$	(74)
Weighted average common shares outstanding - basic (in thousands)	34,548		32,093		34,827		32,566
Dilutive shares from stock awards (in thousands)	—		222		196		—
Weighted average common shares outstanding - diluted (in thousands)	34,548		32,315		35,023		32,566
Basic income (loss) per share	$	(0.99)	$	0.47	$	0.56	$	(2.29)
Diluted income (loss) per share	$	(0.99)	$	0.47	$	0.56	$	(2.29)

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RETIREMENT BENEFITS (Tables)

6 Months Ended

Jun. 30, 2021

Retirement Benefits [Abstract]

Components of Net Periodic Benefit Cost

The following table summarizes the components of net periodic pension cost (income) for the periods presented:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
(Dollars in millions)	2020		2021		2020		2021
Service cost	$	—	$	1	$	1	$	1
Interest cost	11		9		23		19
Expected return on plan assets	(16)		(15)		(33)		(31)
Net periodic pension cost (income)	$	(5)	$	(5)	$	(9)	$	(11)

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EQUITY (Tables)

6 Months Ended

Jun. 30, 2021

Time-based RSUs

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Schedule of Nonvested Restricted Stock Units Activity

Changes to non-vested time-based restricted stock units for the six months ended June 30, 2021 were as follows:

	Restricted Stock	Weighted Average
	Units	Grant Date
Shares (in thousands)	Outstanding	Fair Value
Non-vested at December 31, 2020	421	$	9.95
Granted (1)	264	13.86
Vested	(253)	9.39
Forfeited	(60)	11.79
Non-vested at June 30, 2021(2)	372	13.28

(1) Includes 6 thousand dividend equivalent units on certain time-based restricted stock unit awards for dividends related to the stock units granted but not yet vested at the time cash dividends were paid.

(2) Includes the modified value of the time-based restricted stock units associated with the retention agreement for the former Chief Financial Officer.

Performance-based RSUs

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Schedule of Nonvested Restricted Stock Units Activity

Changes to non-vested performance-based restricted stock units for the six months ended June 30, 2021 were as follows:

	Restricted Stock	Weighted Average
	Units	Grant Date
Shares (in thousands)	Outstanding	Fair Value
Non-vested at December 31, 2020	424	$	12.21
Granted (1)	212	13.01
Incremental shares vested (2)	10	—
Vested	(143)	12.87
Forfeited	(65)	10.59
Non-vested at June 30, 2021 (3)	438	11.33

(1) Includes 6 thousand dividend equivalent units on certain performance-based restricted stock unit awards for dividends related to the stock units granted but not yet vested at the time cash dividends were paid.

(2) Incremental shares are a result of performance at 113% of the target level of shares subject to the performance based restricted stock units.

(3) Includes the modified value of the performance-based restricted stock units associated with the retention agreement for the former Chief Financial Officer.

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RESTRUCTURING CHARGES (Tables)

6 Months Ended

Jun. 30, 2021

Restructuring and Related Activities [Abstract]

Charges Incurred as Included in Restructuring Charges

The following table details the charges incurred related to the shutdown of No. 14 paper machine and certain other long-lived assets as included in Restructuring charges on the Unaudited Condensed Consolidated Statements of Operations:

	Three Months Ended		Six Months Ended		Cumulative
(Dollars in millions)	June 30, 2021		June 30, 2021		Incurred
Property, plant and equipment, net	$	—	$	5	$	5
Write-off of spare parts and inventory	—		3		3
Total restructuring costs	$	—	$	8	$	8

The following table details the charges incurred related to the Duluth Mill closure as included in Restructuring charges on the Unaudited Condensed Consolidated Statements of Operations:

	Three Months Ended		Six Months Ended		Cumulative
(Dollars in millions)	June 30, 2021		June 30, 2021		Incurred
Property, plant and equipment, net	$	—	$	—	$	3
Severance and benefit costs	—		—		1
Write-off of spare parts and inventory	—		—		2
Write-off of purchase obligations and commitments	5		7		8
Other costs	1		2		2
Total restructuring costs	$	6	$	9	$	16

The following table details the charges incurred related to the Luke Mill closure as included in Restructuring charges on the Unaudited Condensed Consolidated Statements of Operations:

	Six Months Ended
	June 30,				Cumulative
(Dollars in millions)	2020		2021		Incurred
Property, plant and equipment, net	$	—	$	—	$	10
Severance and benefit costs	(1)		—		18
Write-off of spare parts and inventory	—		—		9
Write-off of purchase obligations and commitments	—		—		1
Other costs(1)	7		—		19
Total restructuring costs	$	6	$	—	$	57

(1) Other costs primarily relate to activities associated with the shutdown of property, plant and equipment, such as draining, cleaning, dismantling, securing and disposing of such assets. Other costs for the six months ended June 30, 2020 includes $6 million for the final cleaning and shutdown of various storage tanks.

Changes in Restructuring Reserve Liabilities Related to the Closure

The following table details the changes in the restructuring reserve liabilities related to the permanent shutdown of the Duluth Mill which are included in Accrued and other liabilities on the Unaudited Condensed Consolidated Balance Sheet:

	Six Months Ended
(Dollars in millions)	June 30, 2021
Beginning balance of reserve	$	2
Severance and benefit payments	(1)
Purchase obligations	7
Other costs	2
Payments on other costs	(2)
Ending balance of reserve	$	8

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SUMMARY OF BUSINESS AND BASIS OF PRESENTATION (Detail) - Other Events, COVID-19	Jun. 30, 2021 T
Closure of Duluth Mill | Supercalendered/Packaging Papers
Segment Reporting Information [Line Items]
Number of production capacity	270,000
Idle of Wisconsin Rapids Mill | Coated and Packaging Papers
Segment Reporting Information [Line Items]
Number of production capacity	540,000

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REVENUE RECOGNITION (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Disaggregation of Revenue [Line Items]
Revenue from contract with customer	$ 329	$ 268	$ 611	$ 739
End-users and Converters
Disaggregation of Revenue [Line Items]
Revenue from contract with customer	99	110	186	280
Brokers and Merchants
Disaggregation of Revenue [Line Items]
Revenue from contract with customer	178	108	328	327
Printers
Disaggregation of Revenue [Line Items]
Revenue from contract with customer	52	50	97	132
Paper
Disaggregation of Revenue [Line Items]
Revenue from contract with customer	289	219	539	640
Packaging
Disaggregation of Revenue [Line Items]
Revenue from contract with customer	6	18	13	42
Pulp
Disaggregation of Revenue [Line Items]
Revenue from contract with customer	$ 34	$ 31	$ 59	$ 57

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SUPPLEMENTAL FINANCIAL STATEMENT INFORMATION - Additional Information (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020	Dec. 31, 2020
Income Tax Contingency [Line Items]
Restricted cash, intangibles	$ 2	$ 2	$ 2	$ 2	$ 2
Depreciation expense	16	20	117	42
Accelerated depreciation recognized			84
Capital expenditures unpaid			3	4
Income tax expense (benefit)	2	(3)	(12)	23
Affiliated Entity
Income Tax Contingency [Line Items]
Revenue from affiliates	18		33
Accounts receivable, related parties	3		3		$ 4
State and Local Jurisdiction
Income Tax Contingency [Line Items]
Additional valuation allowance recognized (reduced)	$ (1)	$ 1	$ 3	$ 7

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SUPPLEMENTAL FINANCIAL STATEMENT INFORMATION - Inventories by Major Category (Detail) - USD ($) $ in Millions	Jun. 30, 2021	Dec. 31, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Raw materials	$ 30	$ 45
Work-in-process	21	31
Finished goods	91	125
Replacement parts and other supplies	18	23
Inventories	$ 160	$ 224

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DISPOSITIONS - Additional Information (Details) $ in Millions			3 Months Ended				6 Months Ended		11 Months Ended
	May 13, 2021 USD ($)	Aug. 01, 2020 USD ($) machine	Sep. 30, 2021 USD ($)	Jun. 30, 2021 USD ($) machine	Mar. 31, 2021 USD ($)	Jun. 30, 2020 USD ($)	Jun. 30, 2021 USD ($) machine	Jun. 30, 2020 USD ($)	Jun. 30, 2021 USD ($) machine	Dec. 31, 2020 USD ($)	Feb. 10, 2020 USD ($)
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Net proceeds from Sale of Androscoggin/Stevens Point Mills							$ 0	$ 340
Number of paper machines | machine		2		2			2		2
Proceeds from sale of machines and equipment		$ 11		$ 1	$ 1				$ 10
Assets held for sale				6			$ 6		6	$ 17
Subsequent Event | Forecast
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Proceeds from sale of machines and equipment			$ 1
Disposal Group, Disposed of by Sale, Not Discontinued Operations | Verso Androscoggin, LLC
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Consideration considered											$ 352
Verso’s unfunded pension											$ 37
Net proceeds from Sale of Androscoggin/Stevens Point Mills								340
Proceeds from divestiture of businesses								346
Cash divested								6
Gain (loss) on disposal								88
Transition services revenue recognized						$ 2		3
Disposal Group, Disposed of by Sale, Not Discontinued Operations | Verso Androscoggin, LLC | Cost of Products Sold
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Transition services revenue recognized						1		1
Disposal Group, Disposed of by Sale, Not Discontinued Operations | Verso Androscoggin, LLC | Selling, General and Administrative Expenses
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Transition services revenue recognized						$ 1		$ 2
Disposal Group, Disposed of by Sale, Not Discontinued Operations | Duluth Mill
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Proceeds from divestiture of businesses	$ 7
Cash divested	1
Gain (loss) on disposal	$ (3)
Disposal Group, Held-for-sale, Not Discontinued Operations | Luke Mill
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Assets held for sale				$ 6			$ 6		$ 6	$ 17

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DEBT - Narrative (Details) - USD ($)	May 10, 2021	Jun. 30, 2021	Dec. 31, 2020	Feb. 06, 2019
Line of Credit Facility [Line Items]
Debt instrument, fair value disclosure		$ 0	$ 0
ABL Facility
Line of Credit Facility [Line Items]
Credit facility, remaining borrowing capacity		129,000,000
ABL Facility | Revolving Credit Facilities
Line of Credit Facility [Line Items]
Long-term debt		0
ABL Facility | Letter of Credit
Line of Credit Facility [Line Items]
Long-term debt		21,000,000
ABL Facility | ABL Third Amendment Facility
Line of Credit Facility [Line Items]
Line of credit facility, unused capacity, commitment fee percentage	0.25%
ABL Facility | ABL Third Amendment Facility | Minimum | LIBOR
Line of Credit Facility [Line Items]
Debt instrument, basis spread on variable rate	1.25%
ABL Facility | ABL Third Amendment Facility | Minimum | Base Rate
Line of Credit Facility [Line Items]
Debt instrument, basis spread on variable rate	0.25%
ABL Facility | ABL Third Amendment Facility | Maximum | LIBOR
Line of Credit Facility [Line Items]
Debt instrument, basis spread on variable rate	1.75%
ABL Facility | ABL Third Amendment Facility | Maximum | Base Rate
Line of Credit Facility [Line Items]
Debt instrument, basis spread on variable rate	0.75%
ABL Facility | ABL Third Amendment Facility | Revolving Credit Facilities
Line of Credit Facility [Line Items]
Credit facility, borrowing capacity	$ 200,000,000
ABL Facility | ABL Third Amendment Facility | Letter of Credit
Line of Credit Facility [Line Items]
Credit facility, borrowing capacity	75,000,000
ABL Facility | ABL Third Amendment Facility | Bridge Loan
Line of Credit Facility [Line Items]
Credit facility, borrowing capacity	$ 20,000,000
ABL Facility | ABL Amendment Facility
Line of Credit Facility [Line Items]
Line of credit, maximum borrowing capacity, accordion feature				$ 75,000,000
ABL Facility | ABL Amendment Facility | Revolving Credit Facilities
Line of Credit Facility [Line Items]
Credit facility, borrowing capacity				350,000,000
ABL Facility | ABL Amendment Facility | Letter of Credit
Line of Credit Facility [Line Items]
Credit facility, borrowing capacity				100,000,000
ABL Facility | ABL Amendment Facility | Bridge Loan
Line of Credit Facility [Line Items]
Credit facility, borrowing capacity				$ 35,000,000
ABL Facility | ABL Facility | Revolving Credit Facilities
Line of Credit Facility [Line Items]
Line of credit facility, current borrowing capacity		$ 150,000,000

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EARNINGS PER SHARE - Reconciliation of Basic and Diluted Earnings (Loss) per Common Share (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Earnings Per Share [Abstract]
Net income (loss) available to common stockholders (in millions)	$ 16	$ (34)	$ (74)	$ 20
Weighted average common shares outstanding - basic (shares)	32,093	34,548	32,566	34,827
Dilutive shares from stock awards (shares)	222	0	0	196
Weighted average common shares outstanding - diluted (shares)	32,315	34,548	32,566	35,023
Basic income (loss) per share (usd per share)	$ 0.47	$ (0.99)	$ (2.29)	$ 0.56
Diluted income (loss) per share (usd per share)	$ 0.47	$ (0.99)	$ (2.29)	$ 0.56

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EARNINGS PER SHARE - Additional Information (Details) - $ / shares shares in Millions	3 Months Ended	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2021	Jun. 11, 2021
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Class of warrant or right, outstanding (in shares)	1.8	1.8
Exercise price of warrants (in dollars per share)	$ 27.86	$ 20.89	$ 20.89
Number of shares called by warrants (in shares)	1.8	2.4
Restricted Stock Units (RSUs)
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from calculation of diluted earnings per share (in shares)	0.8	0.8

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RETIREMENT BENEFITS - Components of Net Periodic Benefit Cost (Detail) - Pension Plan - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Defined Benefit Plan Disclosure [Line Items]
Service cost	$ 1	$ 0	$ 1	$ 1
Interest cost	9	11	19	23
Expected return on plan assets	(15)	(16)	(31)	(33)
Net periodic pension cost (income)	$ (5)	$ (5)	$ (11)	$ (9)

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RETIREMENT BENEFITS - Additional Information (Detail) - Pension Plan - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020	Mar. 11, 2021	Mar. 10, 2021
Defined Benefit Plan Disclosure [Line Items]
Contribution made by employer	$ 9	$ 10	$ 16	$ 18
Expected cash contributions for current fiscal year					$ 25	$ 46
Minimum
Defined Benefit Plan Disclosure [Line Items]
Expected cash contribution remainder of fiscal year (at least)	$ 9		$ 9

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EQUITY - Additional Information (Details) - USD ($)							3 Months Ended		6 Months Ended
	Aug. 06, 2021	Jun. 11, 2021	May 13, 2021	May 07, 2021	Feb. 05, 2021	Aug. 05, 2020	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020	Mar. 05, 2021	Dec. 31, 2020	Aug. 04, 2020	Feb. 26, 2020	Jul. 15, 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compound annual growth rate, period (in years)									3 years
Estimated compensation expense, percentage									1
Equity award expense							$ 2,000,000	$ 1,000,000	$ 4,000,000	$ 2,000,000
Share repurchase program authorization						$ 150,000,000							$ 250,000,000	$ 250,000,000
Common stock, special dividends declared (in dollars per share)						$ 3.00
Special dividends declared						$ 101,000,000
Share repurchase program remaining authorization							$ 56,000,000		$ 56,000,000
Common stock, dividends declared (in dollars per share)				$ 0.10	$ 0.10
Number of shares called by warrants (in shares)							2,400,000	1,800,000	2,400,000	1,800,000
Exercise price of warrants (in dollars per share)		$ 20.89					$ 20.89	$ 27.86	$ 20.89	$ 27.86
Number of shares called by each warrant (in shares)		1.33
Proceeds to be received upon exercise		$ 50,000,000
Class of warrant or right, exercised (in shares)							0		0
Subsequent Event
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock, dividends declared (in dollars per share)	$ 0.10
Share Repurchase Authorization
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Repurchase of common stock, number of shares (in shares)									700,000	1,600,000
Repurchase of common stock, treasury stock acquired, average price per share (in dollars per share)									$ 13.24	$ 14.14
Dutch Auction Tender Offer
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share repurchase program authorization			$ 55,000,000
Repurchase of common stock, number of shares (in shares)			3,000,000.0						3,000,000.0
Repurchase of common stock, treasury stock acquired, average price per share (in dollars per share)			$ 18.10						$ 18.10
Treasury stock acquired			$ 56,000,000
Restricted Stock Units (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation cost not yet recognized							$ 7,000,000		$ 7,000,000
Vested and expected to vest, outstanding (in shares)							800,000		800,000
Compensation cost not yet recognized, period for recognition (in years)									2 years 2 months 12 days
Time-based RSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares granted (in shares)									264,000
Performance awards fair value (in dollars per share)							$ 13.28		$ 13.28			$ 9.95
Performance-based RSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares granted (in shares)									212,000
Performance awards fair value (in dollars per share)							$ 11.33		$ 11.33			$ 12.21
Minimum | Dutch Auction Tender Offer
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Repurchase of common stock, treasury stock acquired, average price per share (in dollars per share)			$ 16.00
Maximum | Dutch Auction Tender Offer
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Repurchase of common stock, treasury stock acquired, average price per share (in dollars per share)			$ 18.30
Class A
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares called by warrants (in shares)		2,400,000													1,800,000
Exercise price of warrants (in dollars per share)															$ 27.86
Warrants term (in years)															7 years
Share Based Compensation Award Tranche One | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting rights, percentage									0.00%
Share Based Compensation Award Tranche One | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting rights, percentage									200.00%
Executive Officer and Management | Time-based RSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares granted (in shares)									300,000
Award vesting period (in years)									3 years
Executive Officer and Management | Performance-based RSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares granted (in shares)									200,000
Chief Financial Officer | Time-based RSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Performance awards fair value (in dollars per share)											$ 13.32
Chief Financial Officer | Performance-based RSUs | 2019
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Performance awards fair value (in dollars per share)											0.67
Chief Financial Officer | Performance-based RSUs | 2020
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Performance awards fair value (in dollars per share)											$ 8.66

XML

EQUITY - Changes In Non-vested Units (Details) shares in Thousands	6 Months Ended
	Jun. 30, 2021 $ / shares shares
Weighted Average Grant Date Fair Value
Incremental granted share, percentage	113.00%
Time-based RSUs
Restricted Stock Units Outstanding
Non-vested, beginning balance (in shares)	421
Granted (in shares)	264
Vested (in shares)	(253)
Forfeited (in shares)	(60)
Non-vested, ending balance (in shares)	372
Weighted Average Grant Date Fair Value
Non-vested, beginning balance (in dollar per share) | $ / shares	$ 9.95
Granted (in dollar per share) | $ / shares	13.86
Vested (in dollar per share) | $ / shares	9.39
Forfeited (in dollar per share) | $ / shares	11.79
Non-vested, ending balance (in dollar per share) | $ / shares	$ 13.28
Time-based Dividend Equivalent Units
Restricted Stock Units Outstanding
Granted (in shares)	6
Performance-based RSUs
Restricted Stock Units Outstanding
Non-vested, beginning balance (in shares)	424
Granted (in shares)	212
Incremental shares vested (in shares)	10
Vested (in shares)	(143)
Forfeited (in shares)	(65)
Non-vested, ending balance (in shares)	438
Weighted Average Grant Date Fair Value
Non-vested, beginning balance (in dollar per share) | $ / shares	$ 12.21
Granted (in dollar per share) | $ / shares	13.01
Incremental shares vested (in dollar per share) | $ / shares	0
Vested (in dollar per share) | $ / shares	12.87
Forfeited (in dollar per share) | $ / shares	10.59
Non-vested, ending balance (in dollar per share) | $ / shares	$ 11.33
Performance-based Dividend Equivalent Units
Restricted Stock Units Outstanding
Granted (in shares)	6

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RESTRUCTURING CHARGES - Additional Information (Details) $ in Millions		1 Months Ended		3 Months Ended	6 Months Ended
	Feb. 08, 2021 T	Jul. 31, 2020 T	Jun. 30, 2019 T position	Jun. 30, 2021 USD ($)	Jun. 30, 2021 USD ($)	Jun. 30, 2020 USD ($)
Restructuring Cost and Reserve [Line Items]
Accelerated depreciation recognized					$ 84
Restructuring charges				$ 6	17	$ 6
Closure of No. 14 Paper Machine and Certain Other Long-Lived Assets
Restructuring Cost and Reserve [Line Items]
Decrease in production capacity (in tons) | T	185,000
Accelerated depreciation recognized					84
Restructuring charges				0	8
Closure of No. 14 Paper Machine and Certain Other Long-Lived Assets | Property, plant and equipment, net
Restructuring Cost and Reserve [Line Items]
Restructuring charges				0	5
Closure of No. 14 Paper Machine and Certain Other Long-Lived Assets | Write-off of spare parts and inventory
Restructuring Cost and Reserve [Line Items]
Restructuring charges				0	3
Closure of Duluth Mill
Restructuring Cost and Reserve [Line Items]
Decrease in production capacity (in tons) | T		270,000
Restructuring charges				6	9
Closure of Duluth Mill | Property, plant and equipment, net
Restructuring Cost and Reserve [Line Items]
Restructuring charges				0	0
Closure of Duluth Mill | Write-off of spare parts and inventory
Restructuring Cost and Reserve [Line Items]
Restructuring charges				$ 0	0
Closure of Luke Mill
Restructuring Cost and Reserve [Line Items]
Number of positions eliminated | position			675
Restructuring charges					0	6
Closure of Luke Mill | Property, plant and equipment, net
Restructuring Cost and Reserve [Line Items]
Restructuring charges					0	0
Closure of Luke Mill | Write-off of spare parts and inventory
Restructuring Cost and Reserve [Line Items]
Restructuring charges					$ 0	$ 0
Closure of Luke Mill | Coated Freesheet
Restructuring Cost and Reserve [Line Items]
Decrease in production capacity (in tons) | T			450,000

XML

RESTRUCTURING CHARGES - Charges Incurred as Included in Restructuring Charges (Details) - USD ($) $ in Millions	3 Months Ended	6 Months Ended
	Jun. 30, 2021	Jun. 30, 2021	Jun. 30, 2020
Restructuring and Related Cost [Abstract]
Restructuring costs	$ 6	$ 17	$ 6
Closure of No. 14 Paper Machine and Certain Other Long-Lived Assets
Restructuring and Related Cost [Abstract]
Restructuring costs	0	8
Cumulative incurred	8	8
Closure of No. 14 Paper Machine and Certain Other Long-Lived Assets | Property, plant and equipment, net
Restructuring and Related Cost [Abstract]
Restructuring costs	0	5
Cumulative incurred	5	5
Closure of No. 14 Paper Machine and Certain Other Long-Lived Assets | Write-off of spare parts and inventory
Restructuring and Related Cost [Abstract]
Restructuring costs	0	3
Cumulative incurred	3	3
Closure of Duluth Mill
Restructuring and Related Cost [Abstract]
Restructuring costs	6	9
Cumulative incurred	16	16
Closure of Duluth Mill | Property, plant and equipment, net
Restructuring and Related Cost [Abstract]
Restructuring costs	0	0
Cumulative incurred	3	3
Closure of Duluth Mill | Severance and benefit costs
Restructuring and Related Cost [Abstract]
Restructuring costs	0	0
Cumulative incurred	1	1
Closure of Duluth Mill | Write-off of spare parts and inventory
Restructuring and Related Cost [Abstract]
Restructuring costs	0	0
Cumulative incurred	2	2
Closure of Duluth Mill | Write-off of purchase obligations and commitments
Restructuring and Related Cost [Abstract]
Restructuring costs	5	7
Cumulative incurred	8	8
Closure of Duluth Mill | Other costs
Restructuring and Related Cost [Abstract]
Restructuring costs	1	2
Cumulative incurred	2	2
Closure of Luke Mill
Restructuring and Related Cost [Abstract]
Restructuring costs		0	6
Cumulative incurred	57	57
Closure of Luke Mill | Property, plant and equipment, net
Restructuring and Related Cost [Abstract]
Restructuring costs		0	0
Cumulative incurred	10	10
Closure of Luke Mill | Severance and benefit costs
Restructuring and Related Cost [Abstract]
Restructuring costs		0	(1)
Cumulative incurred	18	18
Closure of Luke Mill | Write-off of spare parts and inventory
Restructuring and Related Cost [Abstract]
Restructuring costs		0	0
Cumulative incurred	9	9
Closure of Luke Mill | Write-off of purchase obligations and commitments
Restructuring and Related Cost [Abstract]
Restructuring costs		0	0
Cumulative incurred	1	1
Closure of Luke Mill | Other costs
Restructuring and Related Cost [Abstract]
Restructuring costs		0	7
Cumulative incurred	$ 19	$ 19
Closure of Luke Mill | Facility closing
Restructuring and Related Cost [Abstract]
Restructuring costs			$ 6

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RESTRUCTURING CHARGES - Changes in Restructuring Reserve Liabilities Related to the Closure (Details) - USD ($) $ in Millions	3 Months Ended	6 Months Ended
	Jun. 30, 2021	Jun. 30, 2021	Jun. 30, 2020
Restructuring Reserve [Roll Forward]
Purchase obligations	$ 6	$ 17	$ 6
Closure of Duluth Mill
Restructuring Reserve [Roll Forward]
Beginning balance of reserve		2
Severance and benefit payments		(1)
Purchase obligations	6	9
Other costs		2
Payments on other costs		(2)
Ending balance of reserve	$ 8	8
Closure of Duluth Mill | Purchase obligations
Restructuring Reserve [Roll Forward]
Purchase obligations		$ 7

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COMMITMENTS AND CONTINGENCIES (Detail) $ in Thousands		1 Months Ended	3 Months Ended	6 Months Ended
	Apr. 01, 2021 USD ($)	Nov. 30, 2019 tank	Jun. 30, 2021 USD ($)	Jun. 30, 2021 USD ($)	Dec. 31, 2020 USD ($)
Loss Contingencies [Line Items]
Number of aboveground storage tanks | tank		3
Charges to expense for new losses				$ 4,000
Accrual of environmental loss contingencies			$ 8,000	8,000
Accrual of environmental loss contingencies, current			3,000	3,000	$ 5,000
Accrued environmental loss contingencies, noncurrent			5,000	5,000
Business exit costs			$ 4,000	$ 6,000
Potomac Riverkeeper Network and Maryland Department of the Environment
Loss Contingencies [Line Items]
Settlement penalties and fees	$ 1,000
Reimbursement for first year proceeding decree	25
Reimbursement each year after first year proceeding decree	$ 20
Monitoring period (in years)	3 years